By Jean Shaoul
                    9 July 1999

                    Ehud Barak, Israel's new Prime Minister, has formed an unrepresentative
                    coalition government that will concentrate power in his hands and
                    continue the policies of the outgoing right-wing Likud administration.

                    Only seven weeks ago, the Israeli electorate rejected Likud Prime
                    Minister Benyamin Netanyahu's economic, social and political program
                    with what was, for Israel, a landslide vote for Barak. In direct elections
                    for the office of Prime Minister, Barak received 56.5 percent of the vote
                    compared to 43.5 percent for Netanyahu.

                    Such is the fractured nature of Israeli political and social life that the three
                    largest parties, including Barak's party, One Israel, together hold less
                    than half the seats in the 120-member parliament, the Knesset.

                    One Israel was formerly the Labour Party. Its name change was in order
                    to distance the party from its previous advocacy of social reformist
                    policies. A former military general with little political experience, Barak's
                    meteoric rise to leadership after the assassination of Yitzhak Rabin itself
                    speaks volumes for the political degeneration of the Labour Party.

                    After lengthy negotiations, he has formed a 75-member coalition with
                    seven other parties. The coalition significantly does not include the Am
                    Ehad (One People) party of Amir Peretz, the leader of Histadrut, the
                    trade union organisation to which most workers, particularly in the public
                    sector, belong. Peretz split from Labour to form a separate party as
                    public sector workers and students mounted a series of strikes over the
                    last year.

                    Neither does Barak's coalition include any Arab politicians, although
                    Israeli Arab voters, a crucial bloc, supported him nearly unanimously.

                    The coalition does on the other hand involves all the religious parties,
                    including the ultra-orthodox parties that want to establish a Jewish
                    fundamentalist state. This is the first time since 1952 that they will all
                    serve in a Labour-led government. Hitherto, Labour has always been a
                    strongly secular party, opposed to the domination of the religious leaders
                    over political and social life. The change has caused huge resentment
                    among One Israel's secular allies.

                    Barak has included the religious party Shas, whose disgraced leader will
                    serve a four-year jail sentence for corruption while holding office in
                    previous governments, including Labour. He has included the Centre
                    party, led by Yitzhak Mordechai, a former Likud member, the secular
                    liberal Meretz party and the Russian immigrant party, Yisrael BeAliya.
                    He attempted to bring Likud into the coalition, but could not reach
                    agreement with acting leader Ariel Sharon, another former military
                    general.

                    By including such a large number of small parties, Barak is not beholden
                    to any one member of the coalition. It also leaves the opposition,
                    dominated by the right-wing Likud, Arab parties and ultra-nationalists, in
                    disarray.

                    The price of establishing such a large coalition has been to offer seats
                    round the cabinet table. Shas has four posts. Sharansky of the Russian
                    immigrant party has the coveted interior ministry. The National Religious
                    Party has the powerful housing ministry, although Barak will personally
                    take the decisions on any further building projects in the West Bank
                    settlements.

                    This leaves only six seats for his own party and one for a woman, giving
                    rise to considerable grumbling among his supporters.

                    The Prime Minister has taken steps to strengthen his own office and will
                    hold the key defence post.

                    The finance post has gone to Avraham Shohat, who held the same post
                    in the 1992-96 Labour coalition. When the news leaked out, the Israeli
                    Stock Exchange immediately registered its disapproval and demands
                    were raised that any plans for stimulating the economy with government
                    spending and expanding the deficit must be dropped: Barak had to
                    continue the Likud government's “successful fight against inflation”.

                    Shohat quickly announced: "I'd like to reassure the business community
                    that we are going to pursue a very responsible policy that will be good
                    for the economy, a policy of growth." In effect he was signalling that One
                    Israel has abandoned any pretence of pursuing economic policies that
                    would ensure national cohesion. Instead it will continue the Likud policies
                    that have led to unemployment of more than 300,000 in a country of 6
                    million people. Business leaders are demanding more of the same, with
                    calls for the “reform of the capital markets”, the breakup of monopolies
                    like the Port Authority and the Electric Corporation, the privatisation of
                    the airline El Al, the Railways Authority, and other state-owned
                    enterprises, as well as cuts in taxes.

                    Barak has still to work out a role for the 75-year-old Shimon Peres, the
                    former Prime Minister and leader of the Labour Party. Parliament
                    immediately rejected his nomination for Knesset Speaker in favour
                    Avraham Burg, Barak's political rival. By assigning other ministries to
                    people with little expertise, experience or interest in their portfolios, he
                    has tried to ensure not only that his policies dominate but also that his
                    political rivals will be unable to build an effective power base against him.
                    Like the military man that he is, his overall conception in government
                    building is one of divide and rule.

                    One of the key features of the coalition agreement is the introduction of
                    the so-called "Norwegian Law". This will enable Barak to expand the
                    cabinet from 18 to 24, while asking ministers to give up their Knesset
                    seats to allow those lower down the party lists to enter in their place. This
                    will lead to an increasingly authoritarian form of government, whose
                    ministers are not answerable to parliament.

                    Barak is riding a tiger. The 18-member coalition cabinet is fraught with
                    tensions and contradictions. Despite the Israeli system of proportional
                    representation for electing members of parliament, the cabinet does not
                    contain representatives from some of its key or even traditional voters.
                    Despite having aroused expectations among the working class, One
                    Israel will do its utmost to provide the low wage platform desired by the
                    pharmaceutical, electronic and high tech corporations.