December 28, 1999
Web posted at: 7:46 p.m. EST (0046 GMT)

From staff and wire reports

JERUSALEM (CNN) -- Israeli Prime Minister Ehud Barak prevented a threatened rift in his ruling coalition by agreeing Tuesday to channel millions of dollars to the Orthodox Jewish Shas party.

Shas spokesman Yitzik Sudri said Barak agreed to hand over $120 million extra to Shas-controlled ministries.

Shas had threatened to quit the government if it did not get a bigger bite of the budget. That would have cost Barak his parliamentary majority at a critical time in his ambitious agenda to make peace with Syria, Lebanon and the Palestinians.

The crisis came just days before Barak begins crucial peace talks with Syria. He is to fly to Washington next week for a second round of talks with Syrian Foreign Minister Farouk al-Sharaa. Negotiations resumed last month after a break of nearly four years.

Crisis raises questions about coalition future

The Shas threat raised questions about whether Barak might face similar cracks in his coalition every time an important vote looms.

However, veterans in the Knesset, the Israeli parliament, dismissed it as a predictable drama that unfolds every year at budget time and usually involves Shas.

By Tuesday evening, Shas Cabinet ministers said a solution to the impasse was close. "In principle, we're on the way," said Shas party leader Eli Yishai, following a meeting with Finance Minister Avraham Shochat.

Yishai and the Shas delegates then voted with the government on a series of pre-budget appropriations bills. The vast vote majorities the appropriations bills were getting -- about 65-35 -- were a sign that the crisis was over. Shas spokesman Sudri said the few "minor" issues that remained would be sewn up Wednesday.

The situation set off a round of marathon negotiations, including an all-night session at the Education Ministry, where a 12-page agreement was hammered out to cover the school system's debt, while bringing it under ministry supervision. The struggling education network, which generates the Shas party's grass-roots support, has faced charges of widespread financial misdeeds.

Education debt paid off

Ministry officials said the government would pay off $12.2 million of the education debt, while Shas paid another $4.8 million.

Shas has insisted it will not exact a price for supporting a treaty with Syria, which would probably require Israel to return the strategic Golan Heights.

"We will not sell the Golan Heights for money," said David Tal, a Shas member of parliament. "We absolutely do not link the two."

Barak considers Shas support for peace crucial, as he faces a national referendum over a treaty with Syria. If Shas spiritual leader Rabbi Ovadia Yosef rules in favor of the treaty, that would have a significant effect on Shas voters.

Shas supporters claim discrimination

Shas represents many Jews of North African origin, who charge that the European-dominated Israeli establishment has discriminated against them for decades. That charge lay close to the surface during negotiations to solve the present crisis.

Agriculture Minister Haim Oron of the secular Meretz party -- a Shas rival -- predicted trouble ahead. "What is happening now reflects the difficulty of a government made up of all the extremes, and crises are inevitable," he said.

However, Yosef Lapid, leader of the avowedly secular Shinui party, noted that Shas had a long history of using political leverage to plug its fiscal holes.

"I assume this is a Shas maneuver to extort more money. In 48 hours they'll be back, with millions," he said.

Reuters contributed to this report.