Sharon Rival Backs Down

The Israeli finance minister, Binyamin Netanyahu, yesterday withdrew his threat to resign over the proposed Israeli pullout from Gaza and claimed his about-turn was because of the expected demise of Yasser Arafat.

Mr Netanyahu is Mr Sharon's main rival in the Likud party and his departure would have begun a bout of serious infighting for the leadership.

His decision came on the day that Mr Sharon lost an overall majority in the Knesset. The six members of the pro-settler National Religious party carried out their threat to leave the government coalition over the withdrawal plan.

Mr Sharon is left with a coalition government of only 55 members in the 120-seat Knesset. He is expected to enter into negotiations with the Labour party to persuade them to join him, a move that would bring Shimon Peres back into government.

Mr Netanyahu, though still the likeliest successor to Mr Sharon as Likud leader, will have lost a lot of credibility with the right wing of the party for his failure to resign. He will also have lost outright a lot of the support he enjoyed from the settler movement.

Rightwingers in the Likud party as well as the settlers pressed Mr Netanyahu to resign and openly challenge Mr Sharon for the leadership.

Mr Netanyahu had been pressing Mr Sharon to hold a referendum on the Gaza plan and issued an ultimatum two weeks ago, but the prime minister refused to budge, claiming it would delay the pullout by up to a year.

Climbing down yesterday, Mr Netanyahu said: "The expected departure of Arafat from the Palestinian leadership creates a new situation." He said Mr Arafat's demise would mean the unilateral disengagement plan needed to be reviewed.

"A [Palestinian] power struggle could develop, and we need to wait patiently for it to end."

At a heated Likud meeting on Monday night, Mr Sharon offered Mr Netanyahu a sop by referring the issue of a referendum to a parliamentary committee, where it is likely to fade away. Mr Netanyahu did not dwell on this compromise yesterday, but instead chose to tie his decision to Mr Arafat's demise.