Israeli Finance Minister Yitzhak Modai, locked in a bitter feud with Prime Minister Shimon Peres, today said he would resign in an effort to defuse a coalition crisis that could bring down the "national unity" government.
But Modai did not say when he would resign, and his statement was seen by many observers as a veiled invitation to his colleagues in the Likud bloc to stand behind him and force a breakup of the Labor-led coalition government. That would lead to early elections unless either side could piece together a narrow coalition with minor parties.
Likud ministers in the Cabinet quickly said they were opposed to Modai leaving the government under any circumstances, and they threatened to walk out if he is dismissed by Peres at a scheduled Cabinet meeting on Sunday.
Modai's surprise announcement placed Peres' Labor Party and the rightist Likud bloc in a seemingly intractable standoff and set the stage for a dramatic showdown at the Cabinet meeting.
Following a meeting of the Likud Cabinet members, Trade Minister Ariel Sharon said, "We will not stay in the government even one hour if Mr. Modai will be out of his post."
Modai, warning that "the nation stands at a moment of crisis," said at a press conference that Israel's economic recovery is of "paramount and vital importance," and that he would not stand in its way by precipitating a collapse of the 19-month-old coalition government just six months before Peres is scheduled to hand the prime minister's post to Foreign Minister Yitzhak Shamir of the Likud bloc under a rotation agreement.
Justice Minister Moshe Nissim, however, said, "We reject the announcement of the finance minister. If the prime minister uses his authority" to force Modai out of the Cabinet, "all the Likud ministers, at the same time, will leave the government. This means the dismantling of the national unity government."
Labor Party leaders, holding a national convention in Tel Aviv, indicated that if Modai does not submit his resignation by Sunday, Peres will hand him a letter of dismissal at the Cabinet meeting.
Uzi Bar-am, secretary general of the Labor Party, said, "If they stick to their position, on Sunday they will no longer be members of the government. This means that apparently we will go to elections." But he added, "I'm not sure this is the Likud's last word."
Following the Likud ministers' meeting, Shamir said Peres "has to realize, without a bit of doubt or hesitation, that if he stands by his decision the Likud will not take part in this government, and the government will be dismantled."
The coalition crisis, one of more than a half dozen that have threatened the fragile alliance forged in September 1984 -- after neither Likud nor Labor won a majority in parliamentary elections -- erupted last week while Peres was visiting the United States. Modai, in two newspaper interviews here accused the prime minister of squandering money on Labor Party-affiliated enterprises and of engaging in "a cynical game with the resources of the state." Modai also criticized Peres' travels, calling him a "flying prime minister."
Peres countered by demanding Modai's resignation, although the prime minister's aides said Modai could remain in the Cabinet in another position. Modai today said that he would not remain in the Cabinet, but added cryptically, "I will continue to serve and if afforded an opportunity, I will do my best to assist in our economic recovery."
That statement was interpreted by some political analysts as a signal to the Likud ministers to stand up to Peres and force a breakup of the coalition.
Simha Dinitz, a Labor Party member of parliament, said, however, that he thought the crisis had been resolved, adding, "The Likud will now appoint another minister of finance and then we can proceed and do the job. If there will be no further complications, there should be a continuation of the government of national unity and the leadership of Prime Minister Peres."
Modai portrayed himself as a selfless savior of the coalition, saying, "I have had to weigh the overriding interest of this nation today, which must take precedence over any other considerations.
Nonetheless, some Israeli political analysts suggested Modai may be maneuvering to force Peres into the position of having either to bring down the government in a dramatic showdown Sunday, or to retreat from his position.