Israel's Olmert wins partners for majority coalition

JERUSALEM - Israel's acting Prime Minister Ehud Olmert won over enough parties to form a majority coalition on Sunday, clearing the way for his plans to re-shape the West Bank and set final borders with the Palestinians.

Olmert's centrist Kadima party reached its immediate goal when it drafted a deal earlier in the day with Shas, a leading ultra-religious Jewish party. Shas's ruling rabbis approved the agreement at a late-night meeting, a party spokesman said.

"The parties are signing the deal now," the spokesman said.

With Shas on board, Olmert controls 67 of parliament's 120 seats -- a majority crucial to pushing through his proposal to quit isolated Jewish settlements in the occupied West Bank and strengthen major settlements in the absence of peace talks with the Palestinians.

Israeli media have said the cabinet could be unveiled within days and sworn in on Thursday.

Kadima, the party which won the most seats in March 28 elections but not a majority, has already signed up the centre-left Labour party and the pensioners' party Gil.

Olmert has pledged to set Israel's borders with the Palestinians by 2010 with or without Palestinian agreement. His "convergence plan" includes beefing up major Jewish settlements in the West Bank.

Palestinians have said such a move would not bring peace and would annex land they want for a state of their own in the West Bank and in the Gaza Strip, which Israel quit last year.

Once the government is in place, Olmert plans to visit the United States, Israel's closest ally, to present the outlines of his West Bank proposals at a meeting with US President George W. Bush around May 23, Israeli government sources have said.

Olmert has said he will wait, but not for long, for the Palestinian government led by the militant Islamist movement Hamas to show whether it will moderate its policy of seeking the Jewish state's destruction and become a peace partner.

Peace prospects appear dim as Hamas has defied Israeli and international demands to disarm and recognise Israel.

Kadima won 29 seats in the March elections, which will give it one of the lowest ever tallies for a governing Israeli party.

Labour has 19 seats. Its leader, former trade union chief Amir Peretz, is due to become defence minister, party officials have said. The pensioners party has seven seats, and Shas 12.

Olmert is also courting another ultra-Orthodox party and a Russian-immigrant nationalist faction as he tries to form a broad administration holding some 80 parliamentary seats.

Israel has cut off tax transfers to the Hamas-led government while Western countries have severed direct aid.

The government has no income and has been unable to pay salaries to its 165,000 employees for a month.

But on Sunday, Prime Minister Ismail Haniyeh said he expected the funding crisis to be over "very, very soon".

Haniyeh, a senior Hamas leader, gave no details. The solution is expected to involve payments being made directly to Palestinian Authority employees from abroad.

The Palestinian government is unable to receive transfers from abroad because local, regional and international banks fear sanctions by the United States, which regards Hamas as a terrorist organisation.

"I can say that very, very soon we will have begun ending the crisis of the salaries," Haniyeh told reporters.

Palestinian parliamentary sources say the Cairo-based Arab League is preparing to make direct transfers to the accounts of government employees, bypassing the government.

The monthly wage bill is about US$118 million.

- REUTERS