Peres Threat to Bolt Israel Cabinet Touches Off Crisis : Labor Hits Shamir on PLO Peace

JERUSALEM —  Israel’s government was thrown into crisis today when senior leaders of the left-leaning Labor Party voted to recommend leaving the coalition Cabinet, a move that could force new national elections.

Labor’s Leadership Bureau adopted a proposal, which now goes to the party’s decision-making Central Committee, that accuses Prime Minister Yitzhak Shamir of derailing efforts to end the Palestinian uprising with tough, new conditions set by his Likud Party, Labor’s coalition partner.

“There is no room under these circumstances for the continuation of the government,” said Finance Minister Shimon Peres, the Labor chairman, as he recommended pulling out of the Cabinet.

His colleagues applauded loudly and passed his proposal 45 to 2, with six abstentions.

Labor legislators underscored their anger at Likud by resolving to walk out later today when Parliament votes on five motions of no-confidence in the government by left-wing parties.

It was the most serious crisis since the government was formed in December after weeks of negotiations with small religious parties. The Tel Aviv stock market dropped 4% in value on news of the decision.

Room to Maneuver

But Labor leaders gave themselves room to maneuver, hinting they might not withdraw if real progress is made in efforts to arrange peace negotiations with Palestinians before the meeting of the 1,350-member Central Committee in the next month.

Labor and Likud, which have ruled jointly since the 1984 elections ended in virtual deadlock, have survived a number of crises over ideological issues.

In Warsaw, U.S. Secretary of State James A. Baker III, traveling with President Bush, today said he will send an emissary to the Middle East to test Israel’s commitment to holding elections among Palestinian Arabs on the West Bank and in Gaza.

The emissary, Baker said, will “determine the extent to which the Israeli government is still committed to their election proposals in the aftermath of the Likud Party convention.”

Baker did not say whom he would send to Israel next week, but added that reports that it would be Deputy Secretary of State Lawrence Eagleburger could be mistaken.

Sparks Likud Anger

The Labor leadership’s decision to recommend leaving the coalition sparked anger in Likud. Shamir called Labor’s vote “a mistaken decision” and said dissolving the Cabinet will leave “no choice than to hold early elections which are not needed by the country at this moment.”

The statement also accused Labor of “playing into the hands of the Arabs . . . and relieving the Arabs of any need to respond to the peace initiative.” The PLO has so far rejected the plan.

Peres, the government’s vice premier, argued in a fiery 35-minute speech that Likud’s stance torpedoes the peace plan.

Peres especially criticized Likud’s demand that the proposed elections be postponed until the Palestinian uprising is ended.

“What does that mean? Granting veto power to all the extremists in the territories. We shouldn’t block negotiations just because the terrorists don’t want them,” Peres shouted.