Tiny Party Shows Large Clout on Settlements

JERUSALEM, April 1 -- Secretary of State Condoleezza Rice left Israel on Monday having failed to persuade leaders here to halt settlement construction on occupied Palestinian land. But the setback for Rice was a victory for Rabbi Ovadia Yossef, the spiritual leader of the ultra-Orthodox Shas party.

Within hours of Rice's departure, Israeli Prime Minister Ehud Olmert was on the phone with Yossef to tell him that plans for building 800 new homes in the West Bank settlement of Betar Illit had been approved, according to two Shas officials, just as Shas had requested.

The episode illustrates the extent of the small party's influence over U.S. efforts to negotiate a peace treaty between Israel and the Palestinian Authority.

Shas is the linchpin of Olmert's fragile coalition government. Party leaders have threatened to withdraw their support for Olmert if he freezes settlement construction or if the issue of Jerusalem even comes up in the negotiations.

The threat has put greater pressure on a process that is already faltering. Israeli political analysts say Olmert may face a choice later this year: He can have a peace deal or he can hold his coalition together, but not both.

"Olmert needs Shas," said Gabriel Sheffer, a political science professor at the Hebrew University of Jerusalem. "So he is giving them almost anything they want."

What the party has wanted lately is money for its privately run -- but largely publicly funded -- religious education system and new homes for ultra-Orthodox families in Israeli settlements.

After Olmert informed Yossef that the Betar Illit construction could go ahead, Shas members on Monday night helped Olmert fend off a no-confidence motion in the Israeli parliament, despite earlier hints that they might abstain. A spokesman for Olmert, Mark Regev, confirmed that the prime minister had talked with Yossef on Monday afternoon. He would not disclose the content of the conversation or comment on Shas's account.

The party represents Sephardic Jews, mostly from Arab countries, who have long felt marginalized in Israel by the dominant Ashkenazim, who came from Europe.

Although its leaders are ultra-Orthodox, the party has gained favor among less religious Sephardim by offering social services, including an extensive school system, in poorer areas underserved by the state. Much of its funding, however, has been taxpayer money earmarked for Shas's programs as the price of the party's participation in governing coalitions.

The party has also won popular backing by forcing the government to approve affordable-housing projects that are in the West Bank but within an easy drive of Jerusalem, such as Betar Illit.

When Olmert's government announced in March that it would allow construction of 750 housing units in the West Bank settlement of Givat Zeev to resume, State Department officials described the decision as "unhelpful," and Rice raised concerns about it in a meeting with Israeli Foreign Minister Tzipi Livni.