Labor Victory Seen As Landmark Shift In Israeli Politics

ISRAELI Labor Party leader Yitzhak Rabin pondered how best to form a government yesterday after his unexpectedly convincing election victory reshaped the Israeli political landscape and opened new paths to Middle East peace.

Vaulting to the summit of Israeli politics with a parliamentary advantage unmatched for the past 15 years, Mr. Rabin finds himself in a commanding position from which to choose the coalition partners he will need in order to rule.

With 98 percent of the vote in Tuesday's elections counted, Labor had won 45 of the 120 Knesset (parliament) seats, against 32 for the ruling Likud Party under Yitzhak Shamir.

That margin means that Rabin could form a government with only the votes of the left-wing Meretz Party's 12 Knesset members and tacit support from the five Arab members, giving him control of 62 seats.

He is, however, widely expected to bring at least one ultra-orthodox religious party into his coalition to give it added stability.

The election results were greeted with excited surprise by Labor and Meretz supporters, jubilant at the prospect of taking the reins of power after 15 years of Likud rule.

Labor's victory also evoked satisfied and even optimistic responses from Palestinian leaders, who are hopeful that Rabin will show the flexibility he has promised in the Middle East peace talks. They see a Labor government as a welcome change from Mr. Shamir's approach.

Likud leaders, on the other hand, continued to state their conviction that they were right and promised to fight against any concessions Rabin might try to make.

"I've lost my voice," Shamir croaked in a speech to supporters in which he could not quite bring himself to acknowledge defeat, "but I have not lost my belief in our direction. We will continue with our just struggle."

"These were the most significant elections in Israel since 1977," when Likud leader Menachem Begin wrested power from Labor for the first time in 30 years, said Hebrew University political scientist Ehud Sprinzak, expressing a widely shared opinion.

"Yesterday was a critical turnaround election," echoed Prof. Naomi Chazan, who won a Knesset seat on the Meretz list. "They have as much significance or more than the vote in 1977."

Rabin said yesterday he would wait until the final official election results are published tomorrow before making overtures to possible coalition partners.

But Aryeh Deri, head of the ultra-orthodox Shas Party, which won seven seats, said he had already been approached.

Although Rabin could manage without partners from the right wing and religious blocs, he is generally expected to seek added stability for his government by inviting Shas or another religious party to join his Cabinet.

Such a move would also provide a counterweight to Meretz, whose views on Palestinian autonomy and future statehood are much more generous than Rabin's own.

"Rabin would not be too comfortable with just one partner on the left," suggested Jerusalem Post columnist Yosef Goell.

Meretz leader Shulamit Aloni said yesterday she would not object to sitting in a Cabinet with an ultra-orthodox party because "they do not have the power they had before to blackmail the government."

Although the religious parties lost only one seat overall, they are "no longer in a pivotal position" to form a government, said Professor Sprinzak, "and they cannot afford to stay out of the coalition because what is most important to them is financial support for their institutions."

Whether Rabin will seek to include both Meretz and a religious party in his government from the start is unclear. He might prefer, suggests Itzhak Galnoor of the Israel Democracy Institute, to rely initially only on Meretz and the tacit support of the two Arab parties "and wait for the others to join, which they will."

This would give him the advantage of being able to establish a government quickly so that he can begin negotiations with Washington before the United States elections in order to secure the $10 billion in loan guarantees that the government will need to cover its $2 billion budget deficit this year.

A national-unity government with the Likud seems unlikely at the moment, most observers agree, partly because many Labor Knesset members would oppose it, and partly because the Likud is likely to succumb to internecine fighting in the wake of its election loss.

Shamir said early yesterday morning he planned to retire "soon," which will trigger a fierce succession battle among the party's several factions.

"Why should Rabin set up a national unity government with a party in total confusion?," asked Yoram Peri, editor of the Labor daily Davar.

Meanwhile, the widespread welcome that Arab officials from Damascus to Cairo gave to Rabin's victory indicates the faith they have placed in his promises to move fast on Palestinian autonomy and the Middle East peace process as a whole.

For the Palestinians, Hanan Ashrawi, spokeswoman on the Palestinian negotiating team, said that she was optimistic Rabin would freeze Jewish settlement in Israeli occupied territories, a move the Palestinians have long demanded.

If Rabin keeps his promises, said Professor Galnoor, "there will be less emphasis on the process in the peace process and more emphasis on the peace.

"I think we might witness something quite dramatic."