Options narrow for any Israeli government but Labor-Likud

After a month of intense coalition talks, Israel's political system is back at square one, as evenly divided as on the morning after the country's Nov. 1 vote. Next Monday, the 21 days allotted to Likud Party leader Yitzhak Shamir to build a governing coalition expire. President Chaim Herzog will then decide whether to grant Mr. Shamir, Israel's prime minister, a 21-day extension as provided by law. Mr. Herzog could also give Shamir's opponent, Labor Party leader Shimon Peres, a chance to form a government. The most likely scenario may be Herzog's asking the two parties to join forces in a broad coalition.

Only two days ago that idea was voted down by the Labor Party with an appearance of finality. Junior party members overruled party leaders - Mr. Peres and Yitzhak Rabin - who had negotiated with Likud and favored a coalition.

That vote appeared to pave the way for a narrowly based, right-wing government led by Shamir. But the situation turned around 24 hours later in a switch that is typical of the extremely fluid political situation here.

Agudat Israel, one of the religious parties Likud needed in a narrow coalition, defected to Labor. A surprise agreement signed yesterday between the two parties placed Agudat Israel's five seats in the Knesset, Israel's parliament, firmly in Labor's grasp. The balance in the Knesset shifted just far enough to make it 60 members for Likud and 60 against.

The written agreements signed by Labor and Likud with their religious allies appeared to harden the stalemate over forming a government. These agreements prevent the religious parties from joining with the other major party, but don't prevent the two major parties from joining forces.

That may yet force them into another alliance. And both Likud and Labor face major obstacles to governing without one another. For instance, 60 votes against Likud is not the same as 60 for Labor. The agreement with Agudat Israel enables Labor to block a Likud coalition, but threatens to cost Labor other previously won support.

Heavy criticism has come from Labor's left-wing allies, who are concerned about the passage of restrictive religious legislation. These parties served notice that they would not join Labor if it accepted Agudat Israel's demand to amend the controversial ``Who is a Jew'' law, disqualifying conversions by non-Orthodox rabbis.

``We are deeply disturbed about this phenomenon in which parties who represent a minority of the population use the two major parties as a means of raising the unreasonable price they demand to join the government,'' said Knesset member Amnon Rubenstein, head of the centrist Shinui Party.

At the same time, religious parties allied with the Likud have been wrangling over the distribution of Cabinet posts under a government headed by Shamir.

Observers here agree that the protracted coalition stalemate has highlighted the flaws in Israel's political system and points up the urgency of changing the electoral process. Israeli leaders have been preoccupied for weeks with bargaining with smaller parties to gain their crucial help in forming a ruling coalition.

Mr. Rubenstein has proposed that Labor and Likud join forces for a limited period in a coalition government whose sole purpose would be to change Israel's system of proportional representation. Such a step, he says, could ensure decisive election results, and avoid the farce of weeks of inconclusive political haggling.