Corruption scandal threatens Israeli government

JERUSALEM — JERUSALEM -- In the midst of Israel's crucial peace negotiations with the Palestinians and Syria, Prime Minister Yitzhak Rabin's political base is crumbling under charges of corruption high in his Labor Party.

For Mr. Rabin, who lost the premiership in 1977 in another, smaller scandal and regained it only three years ago, this could become paralyzing, diverting his attention from the peace negotiations to domestic politics and making him even more cautious in calculating what risks he can take for a settlement.


Within Mr. Rabin's Cabinet, the mood is grim. Senior ministers are quoted in Israeli papers as saying that "this is an earthquake, a total collapse -- this will bring us down" and that "this is a snowball, threatening to bury all of us under it and bring Likud [the right-wing opposition bloc] to power."

Coalition proposed


As support for Mr. Rabin declined, President Ezer Weizman last week renewed his suggestion for a "government of national unity" that would bring Likud into the Cabinet as Labor's partner, but undoubtedly at a cost of slowing, even suspending, Israel's negotiations with the Palestine Liberation Organization and perhaps Syria.

But Likud leader Benjamin Netanyahu, scenting blood, is more interested in early elections, and Likud and other right-wing parties intend to press for dissolution of parliament in a motion this week.

Although most commentators focused on the long-term question whether the coalition government will be forced into early elections that the Labor Party would lose, some warn that Mr. Rabin's very attempt to survive the crisis will inevitably slow and weaken his pursuit of peace with Israel's Arab neighbors.

Mr. Rabin, speaking to the Labor Party's executive bureau, sought to defend his leadership.

"The party is under an assault, which is often baseless," he said. "I read, for instance, that I am depressed -- something that I hadn't noticed myself."

Police Minister Moshe Shahal told Parliament that the intensive investigation appears likely to lead soon to indictments of a number of pastleaders of the Histadrut trade union, which has been closely allied with the party.

According to Israeli press accounts, the Histadrut officials used union funds, which were raised by mandatory, tax-like dues paid by almost all Israeli workers, to finance their own and their friends' political activities.

Those involved, according to the daily accounts in the Israeli press, may include Transport Minister Yisrael Kessar, a deputy trade minister, several former top Histadrut officials and as many as five Labor Party members of the Knesset, Israel's parliament.


Labor power base

Representing more than 60 percent of Israel's work force of 2 million, the Histadrut was the Labor Party's main power base for three-quarters of a century until a reformer won last year's election.

The trade union owns scores of companies, factories and collective farms that together account for about a fifth of Israel's economic output.

Although Mr. Rabin has denied all knowledge of the alleged misuse of Histadrut funds and pledged a full cleanup, the impact his government was clear.

"The longer the police examine Labor's affairs, the greater the danger for the party," said Industry and Trade Minister Micha Harish, a former secretary general of the party.

"The investigation could be very prolonged, people's nervous systems would be placed under strain for months, and there is no telling where that could lead."


Rabin to run

To restore his political credibility after widespread speculation that he was now all but a lame duck at the age of 73, Mr. Rabin said he will be a candidate for prime minister next year.

In June, Mr. Rabin is likely to bring a number of the reformers into his Cabinet in a further attempt to consolidate his political base.