JERUSALEM - Israeli Prime Minister Ariel Sharon assembled a new coalition government yesterday that unexpectedly ousted Benjamin Netanyahu as foreign minister and includes a far-right party that advocates expelling Palestinians from the West Bank and Gaza Strip.
Although the ultranationalist National Union Party is to hold only two minor Cabinet posts, its addition to the government, along with another right-wing faction, the National Religious Party, signals that the government will look skeptically at negotiating an early end to the conflict with Palestinians.
Sharon intends to present the new government today or tomorrow for a formal vote of approval in parliament, but it comes after a day of squabbling within his Likud Party over a Cabinet post for Netanyahu, the prime minister's main rival for leadership of the party.
Netanyahu has served as foreign minister in a caretaker government since November, when the breakup of the previous government led to new elections, which Sharon easily won. Yesterday, Sharon named his former finance minister, Silvan Shalom, as foreign minister and asked Netanyahu to take the vacant finance post.
Netanyahu at first refused the offer, which was widely viewed as a shrewd way for Sharon to get rid of him.
Netanyahu relented later and, after talks with one of Sharon's aides, accepted the offer; but he added conditions. Sharon was meeting with his Likud Party leadership last night and had yet to respond to Netanyahu's counteroffer.
While not as glamorous as the post of foreign minister, leadership of the finance ministry is of utmost importance to Israelis. If he accepts the position, Netanyahu would be faced with the unenviable task of making severe and unpopular budget cuts to steer the country out of an economic crisis.
Shalom is a 44-year-old accountant with little experience in foreign affairs, and he was widely criticized for his handling of Israel's financial woes. He is viewed as a party loyalist whose political views match Sharon's.
As deputy defense minister four years ago, he pushed to expel Palestinian leader Yasser Arafat. Shalom now finds himself responsible for selling and explaining Israel's policies to an often-critical audience abroad.
The government will include Sharon's dominant Likud Party, along with the secular, centrist Shinui, and the two right-wing factions, which oppose a Palestinian state and support expanding Jewish settlements - issues at odds with a U.S.-backed peace initiative that Sharon says he supports.
Members of the National Union take an even more extreme view, supporting the expulsion of Palestinians to neighboring Arab countries and annexing the land to Israel.
Sharon sought the faction's support to get its seven parliamentary seats and bolster his slim 61-seat majority in the 120-seat parliament. He now has a more comfortable 68 seats.
Yesterday, Sharon took pains to present himself as a centrist able to fight off the demands of the far right. He told President Bush that he still supports the U.S.-backed peace plan, referred to as a "road map," which calls for concessions on both sides and an eventual Palestinian state - even if two of the factions he invited into his government remain staunchly opposed.
The new government is expected to continue Sharon's hard-line stance against the Palestinians - rejecting the resumption of political negotiations until all violence stops, and Arafat is either removed from power or sidelined.
Shlomo Avineri, political science professor at Hebrew University, said the government would probably make no bold moves toward either peace or all-out war, and there is little chance of a coalition breakup over the Palestinian issue.
"It doesn't appear that issues that [the right-wing parties] are most interested in, like a Palestinian state, are immediately on the agenda," Avineri said. "It might pop up, but it will take some time. I think what Sharon would like to do is not get into a confrontation with the United States."
While the United States and Israel disagree on details of how to resolve the conflict, such as the future of Jewish settlements, Avineri said, they agree that "there is no way to move forward" as long as Arafat retains power.
That gives Sharon room to maneuver. "It means that we're going to see more of the same," he said.
Under Sharon's previous unity government, the center-left Labor Party acted as a brake on Palestinian issues. Labor leaders refused to join Sharon's new coalition, alleging he was not serious about resolving the Palestinian conflict. But Labor leader Amram Mitzna indicated last night that his party remains open to joining Sharon's government.
'A safety net'
"If and when he will advance with the peace process, we shall provide a safety net and be there," Mitzna said on Israel TV. "We will agree to be in the future partners to any move that will extract Israel from the terrible distress it is in."
It is unclear how much influence the National Union will be able to exert. Its members agreed to join with Sharon only after he assured them that no serious negotiations with the Palestinians would take place without Cabinet approval.
The faction has been offered the tourism and transportation Cabinet positions.
Former Jerusalem Mayor Ehud Olmert, the Likud member who ran Sharon's re-election campaign and had been expected to be named finance minister, instead accepted the lesser posting of industry and trade minister.