After a hectic day of meetings, the leaders of Israel's ruling Labor Party now appear likely to nominate Defense Minister Shimon Peres to replace Prime Minister Yitzhak Rabin when the party's 600-member central committee meets Sunday.
Last night, in a radio and television speech that plunged this country's politics into turmoil, Rabin announced that he would not seek re-election because of a financial scandal involving an illegal joint account he and his wife held in a Washington bank.
The account, opened while Rabin was ambassador to the United States, should, under Israel's currency laws, have been closed after the Rabins returned to Israel.
There is still a possibility that Rabin's deputy prime minister, Yigal Allon, will challenge Peres for the party's leadership at Sunday's meeting or that the Peres and Allon factions may seek a compromise candidate, such as Minister of Justice Haim Zadok.
Sources close to Allon say, however, that at this late hour - less than six weeks before the election and three days before party slates must be completed - Allon will probably decide not to make a bid for the party leadership and will concentrate instead on consolidating his own position within the party. The left wing of the party, which opposes Peres, would like to see Allon act as a brake to Peres if Allon himself cannot capture the leadership.
Peres said today that Allon should take the No. 2 place on the party's slate. It is expected that if Peres is chosen to replace Rabin and Labor wins the coming election; Allon would remain as deputy prime minister but probably not as foreign minister, because Peres has already promised that post to former Prime Minister Abba Eban.
Allon's own faction within the party is still urging him to challenging Peres, but some Rabin loyalists have come out now in favor of Peres. Rabin defeated Peres by only 41 votes, out of nearly 3,000 delegate votes cast, at the party's convention in February.
The thorniest problem involving the Peres candidacy is Labor's junior partner within the alignment, the left-of-ce ter Mapam faction, which opposed Peres at the convention as too rightist and too hawkish on reaching a settlement with the Arabs.
Today Peres met with Mapam's leaders to persuade them not to pull out of the alignment, as they have long threatened to do if he becomes Labor's leader. Peres warned them that if they withdrew from the alignment the major opposition party, Likud, might end up with more votes than Labor and be asked to form a government.
Leaders of the National Religious Party, expelled from the Labor coalition in December for a breach of party discipline, have said that they would be prepared to enter into a coalition with Likud instead of with their traditional ally, Labor, with whom they have been associated since Israel's independence 30 years ago.
Peres said today that he does not foresee any change in foreign policy if he becomes party leader and Labor wins. He said he would seek to reconvene the Geneva conference to negotiate peace with the Arabs in the latter part of this year. Peres who has the reputation of being a hawk, took pains today to say that the talk of hawk and dove has no maning at all in the context of current politics.
One government official, in an interview today, said that Israel's foreign policy was not based on Rabin alone and that Peres, if elected, would have to abide by the party's policies. There would be no postponement of progress toward peace, he said, because Israel is not being asked to consider or take any concrete steps at this time anyway.
"This is not like Egypt, where if Sadat fell, his policies might be swept away with him," the source said. "Israel doesn't work that way."
Peres, in a television interview tonight, told of a highly emotional meeting with Rabin this morning in which he stressed that despite their long rivalry they were able to work together even under the present crisis conditions.
The opposition Likud said today that Rabin's fall was but another proof of the total corruption of the Labor Party. Yigael Yadin, head of the Democratic Movement for change, said that while he sympathizes with Rabin personally, the events that have brought him down only prove the faults in the system he was trying to change.
The mood of the country today, however, seemed to indicate a measure of sympathy for Yitzhak Rabin as a man who had made a mistake but was willing to stand up to the consequences and resign after years of service to his country. Pere's warm words about Rabin were an indication of this sympathy.
Labor's chances at the polls next month depend largely on how fast it can overcome the present leadership crisis and how much Rabin's stepping down will be seen as a gesture of purification, allowing a new leader to go before the people untainted by the recent scandals that have plagued the party.
Technically, Rabin cannot resign as prime minister before the general elections next month because he is now leading an interim caretaker government, which resigned last December because it no longer enjoyed a majority. Last night, however, Rabin said he was considering how he might turn over his duties to another government official. It is expected that this matter will be decided on Sunday.