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Israel's Labour leader Ehud Barak has reached a provisional deal with PM-designate Benjamin Netanyahu on forming a coalition, Israeli army radio says. The centre-left Labour party is divided over whether to join a government with Mr Netanyahu's Likud and will vote on the agreement shortly. The right-wing Yisrael Beiteinu and Orthodox Jewish Shas parties have already agreed to join a coalition.

Mr Barak is defence minister in the current government and would retain the post in the next government, Israeli army radio reported. Under the draft agreement, Labour would also get five cabinet posts and the government would commit to continuing negotiations with the Palestinians and to respecting previous deals made with them.

A Likud member of the Knesset, Yuli-Yoel Edelstein, said there was general agreement between Likud and Labour on the main international challenges facing the incoming government. "In terms of other issues like the peace process with the Palestinians, and probably other day-to-day issues, there will be an argument, but this is not what's going to bring the government down," he told the BBC. "Because in practical terms, I don't think that either side really believes that it's possible to reach an agreement with the present Palestinian leadership in the near future."

Hosting the German foreign minister this week, Prime Minister Benjamin Netanyahu used an especially tainted term to condemn the Palestinian demand that Israel's settlements in the occupied West Bank be removed. "Judea and Samaria cannot be Judenrein," a Netanyahu confidant quoted him as telling Frank-Walter Steinmeier. Asked how Germany's top diplomat responded to hearing the Nazi Holocaust term for areas "cleansed of Jews," the confidant said, "What could he do? He basically just nodded."

Asked how Germany's top diplomat responded to hearing the Nazi Holocaust term for areas "cleansed of Jews," the confidant said, "What could he do? He basically just nodded."

Hence the jaw-dropper defiance of "Judenrein," which the confidant said Netanyahu had encouraged cabinet colleagues to deploy in their defense of the settlements and of Israel's insistence that Palestinians recognize it as a Jewish state.

He is trying to convince the Labour Party to join, correspondents say. If he fails to do so, they say, he will be forced to form a narrow coalition with hard-line Israeli parties. The two-week extension sets 3 April as Mr Netanyahu's new deadline.

But Mr Netanyahu has also been seeking the support of the centrist Kadima party. If Kadima also joins the coalition line-up, party leader and current Foreign Minister Tzipi Livni could keep her position, although talks have so far proved inconclusive. Ms Livni has demanded Mr Netanyahu sign up to a two-state solution with the Palestinians before she joins the government.

If Kadima sees through its stated intention to lead the opposition, Likud is expected to try to bring in smaller hard-line parties like Jewish Home, National Union and United Torah Judaism. That would give it a solid right-wing majority of 65 in the 120-seat parliament.

Israel's Prime Minister-designate Benjamin Netanyahu has signed a coalition deal with the far-right Yisrael Beiteinu party, officials say. Under the agreement, Yisrael Beiteinu leader Avigdor Lieberman would become foreign minister, said officials from Mr Netanyahu's Likud party.

He is a strong supporter of the Israeli settler movement and opposes exchanging land for peace with the Palestinians.

Yisrael Beiteinu would get five other cabinet posts, including internal security, infrastructure, tourism, and the integration of new immigrants.

Israel's next Prime Minister, Benjamin Netanyahu, has said his government will be a "partner for peace" with the Palestinians.

The Likud leader pledged to work for peace, security and "rapid development of the Palestinian economy".

"I think that the Palestinians should understand that they have in our government a partner for peace, for security and for rapid economic development of the Palestinian economy," he said. "Peace: It's not the last goal. It's a common and enduring goal for all Israelis and all Israeli governments - mine included," he added. But there was no word about a possible two-state solution, which Palestinian negotiators have been urging him to adopt.

Binyamin Netanyahu, Israel's next prime minister, was last night on the verge of forming a majority coalition after the Labour party agreed a last-minute deal to join his incoming government.

Netanyahu will be prime minister, with Lieberman as his foreign minister and Barak remaining as defence minister, where he was a key figure behind Israel's three-week war in Gaza.

Labour's central committee voted by 680 to 570 in favour of the deal, despite bitter divisions among the party hierarchy. Some at the meeting in Tel Aviv last night showed their frustration, shouting "disgrace" after the result was announced.Netanyahu already has Lieberman's Israel Our Home party on board, as well as the ultra-Orthodox Shas. Now with Labour he has a total of 66 seats - a majority in the 120-seat Knesset, Israel's parliament. However, it is unclear whether the seven Labour MPs who opposed Barak will accept the party's decision or rebel and refuse to support the government.

Israel to propose removing some West Bank settlements Barak hopes dismantling two dozen small outposts will win US support for more expansion in main areas Buzz up! Digg it Rory McCarthy in Jerusalem guardian.co.uk, Tuesday 26 May 2009 11.52 BST Article history Israel is to propose removing two dozen Jewish settlement outposts in the occupied West Bank in the hope of winning US support for the continued expansion of its main settlements, reports said today.

Ehud Barak, the Israeli defence minister, will take the proposal to senior US administration officials in Washington next week, the Associated Press said.

Netanyahu held what was apparently a tense meeting with members of his Likud party yesterday and told them that Israel needed to make some compromise over its settlement-building enterprise in order to encourage Washington to take a tougher stance on Iran and its nuclear programme.

Mr. Netanyahu, the leader of the hawkish Likud Party, stopped short of endorsing a two-state solution for the Israeli-Palestinian conflict, a potential point of friction with the United States. President Obama has called the advancement of the two-state solution “critical.” Mr. Netanyahu opposes the idea of a sovereign Palestinian state, proposing a more limited form of self-rule instead.

Hours before he was sworn in, Mr. Netanyahu said his new government would “work toward peace on three tracks: economic, security and political.” “We do not want to exercise our power over the Palestinians,” he said. “Under the final settlement, the Palestinians will have all the rights to govern themselves except those that endanger the security and existence of the state of Israel.”

The biggest threat to humanity and to Israel comes from the possibility of a radical regime armed with nuclear weapons,” he said, alluding to Iran.

Prime Minister Benjamin Netanyahu may be prepared to endorse a peace process leading to an independent Palestinian state, his defence minister has said.Ehud Barak, a long-time rival now part of Israel's governing coalition, spoke ahead of Mr Netanyahu's first meeting with US President Obama in Washington. He told Israeli TV a regional deal could be struck within three years.

"Netanyahu will tell Obama: We're willing to engage in a process whose end is a regional peace accord," he told Channel 2 TV.

"The Arabs say 'two states,' [and] I don't see a reason why Netanyahu would not say that at the end of an accord... there will be two peoples living side by side in peace and mutual respect," he said.

The prime minister's speech last night returned the Middle East to the days of George W. Bush's "axis of evil." Benjamin Netanyahu delivered a patriarchal, colonialist address in the best neoconservative tradition: The Arabs are the bad guys, or at best ungrateful terrorists

Netanyahu's provincial remarks were not intended to penetrate the hearts of the hundreds of millions of Al Jazeera viewers in the Muslim world. Instead, he sought to appease Tzipi Hotovely, the settler Likud lawmaker, and make it possible to live peaceably with the settler foreign minister Avigdor Lieberman.

The prime minister's declaration that Jerusalem will remain he "undivided capital" of Israel - only Israel - slammed the door before the entire Muslim world.

Israeli Foreign Minister Avigdor Lieberman late Wednesday reiterated Israel’s objection to a complete settlement freeze as the United States considers allowances that could permit some projects already under way to proceed.

"We want to see a stop to the settlements," Clinton told reporters as she stood next to Lieberman, himself a settler. "We think that is an important and essential part of pursuing the efforts leading to a comprehensive agreement and the creation of a Palestinian next to an Israeli Jewish state that is secure in its borders and future," she said.

Israel did not have "any intention to change the demographic balance" of the West Bank, said Lieberman, head of the ultranationalist Yisrael Beitenu party, part of Netanyahu's Likud-led coalition government. "But we think that as in any place, babies are born, people get married, some pass away and we cannot accept this vision about an absolutely complete freezing of settlements," said Lieberman. "I think that we must keep the natural growth," he said.

the United States supports the creation of a viable Palestinian state in virtually all of the West Bank and Gaza. The new Israeli government led by Benjamin Netanyahu opposes this goal, and Foreign Minister Avigdor Lieberman has already said that he does not think Israel is bound by its recent commitments on this issue.  

To advance its own interests, therefore, the United States will have to pursue a more even-handed policy than it has in the past, and put strong pressure on both sides to come to an agreement. Instead of the current "special relationship" -- where the U.S. gives Israel generous and nearly-unconditional support -- the United States and Israel would have a more normal relationship, akin to U.S. relations with other democracies (where public criticism and overt pressure sometimes occurs).  While still committed to Israel’s security, the United States would use the leverage at its disposal to make a two-state solution a reality.

This idea appears to be gaining ground. Several weeks ago, a bipartisan panel of distinguished foreign policy experts headed by Henry Siegman and Brent Scowcroft issued a thoughtful report calling for the Obama administration to “engage in prompt, sustained, and determined efforts to resolve the Arab-Israeli conflict.” Success, they noted, "will require a careful blend of persuasion, inducement, reward, and pressure..."