THE STALEMATE brought about by the inconclusive Israeli elections of July 23 has been broken, finally, by an agreement between the two major parties to share power in a so-called national unity government. A new government could be in place in a week. It sounds crazy that Labor and the outgoing Likud, so long at war, could agree to trade off the prime ministership (first Labor's Shimon Peres, then Yitzhak Shamir) after two years, divide the ministries and otherwise suspend bloodletting. Lack of an acceptable alternative produced the bizarre structure with which Israelis will experiment now.
The rationale is hope that the new dispensation will allow the small parties, which demand exorbitant political payoffs for participating in a government with one or the other large party, to be trimmed to size. It may even permit some electoral reform -- reducing the weight of those small parties permanently.
Meanwhile, or so optimists suggest, Labor and Likud working together will be better able than either governing alone to impose the severe austerity which everyone agrees -- in principle -- is essential to tame the country's galloping economic crisis. In principle? The timid governments and ardent consumers familiar in Israel do not build confidence in its capacity to slay the monster of indexation, which currently protects most Israeli citizens' standard of living, or to shrink the subsidies that ensure the inefficiency of many enterprises.
In foreign policy, a national unity government may institutionalize bipartisanship -- or inertia. During the campaign, some of the sharper edges were filed off the two parties' formal disagreements. There may be a working consensus now, for instance, to continue but to cut back on new West Bank settlements. On negotiations, Labor's and Likud's differing tendencies are rendered somewhat academic by King Hussein's hesitancy, the PLO's fragmentation and the West Bankers' confusion: currently, there is no Arab negotiating partner. On Lebanon, continuing casualties long ago forged a common interest in ending the Israeli occupation as soon as some workable combination of Lebanese and U.N. forces can be put together on the ground.
In this American election season, there is no impulse in the United States to disrupt relations with Israel. The administration has taken the occasion of the Arab-Israeli diplomatic lull, which accompanies Israel's own political travail, to work up plans to help Israel put its economy on a steadier footing. This is worth doing if it involves more than pouring in extra subsidies, enabling Israel to avoid its own hard choices and adding an extra and unneeded level of concern to an American-Israeli relationship that is difficult enough to manage as it is. Sooner or later, however, the United States is going to hve to get back to the Israeli-Palestinian question -- in partial eclipse at the moment but still alive and unresolved.