(IsraelNN.com) Ehud Barak and other Labor leaders now say they are willing to join a new government coalition formed by Tzipi Livni of Kadima. The ball is now in the court of the Sephardic religious Shas party.

Labor
Though Barak said just recently that Livni is not the one he would trust to make major security decisions "when a call comes in at 3 AM," he now says he is willing to join a government headed by her. 

Speaking at a pre-Rosh HaShanah get-together at Labor Party headquarters in Tel Aviv on Tuesday, Barak said that he is interested in helping Livni form a new government, "as Israel faces real challlenges, from Iran down to how to deal with individual terrorists trying to run over people in Jerusalem."

Welfare Minister Yitzchak Herzog of Labor agreed, saying that Livni had "created the groundwork for a coalition [with Labor], and I believe it is possible."
"Both Livni and Barak say they are not afraid of elections," Netanyahu said, "but they're acting as if they are very afraid."

Shas
The key now lies with Kadima's second-largest coalition partner, Shas.  Shas leader Eli Yishai met with Livni on Tuesday afternoon, and noted his party's three demands: Increased National Insurance child allowances, no talks with the PA about dividing Jerusalem, and thirdly - a demand that cropped up in the past few days - a solution for the housing crunch for young hareidi-religious couples.

Livni will have trouble meeting at least the first two demands, as Labor insists on continued talks with the PA as a prerequisite for its membership in the coalition.  In addition, Finance Minister Roni Bar-On of Kadima is strongly against raising the child allowances.  Livni's aides, however, have said that there would likely be "no problem" in finding a way to meet some of the Shas financial demands.

Livni and Yishai agreed to have their representatives exchange position papers on the above issues.

Within Shas, the two politicians most trusted by spiritual leader Rabbi Ovadiah Yosef appear to have opposing positions.  Yishai leans towards new elections, while Communications Minister Ariel Attias says Livni should be given a chance.

Likud
Livni had earlier called on the Likud - currently the party most likely to win national elections if they are held soon - to join a national emergency government.  Likud leader Binyamin Netanyahu held a press conference on Tuesday to explain why he would not do so.

"The country needs general elections," Netanyahu said. "The Prime Minister must be chosen not by a few Kadima members, but by the entire country."

"This [outgoing] government has failed miserably in every area," he continued, "and Livni has said that she will continue the same policies.  We need a fundamental change.  Until there are elections, there will be no governmental stability, because any government that is formed will limp along... It will be temporary and all the parties will be busy trying to achieve political gains."

"Both Livni and Barak say they are not afraid of elections," former Prime Minister Netanyahu said, "but they are acting as if they are very afraid."

Livni was first elected to the Knesset in 1999 on the Likud party list, when Netanyahu lost his bid to be re-elected Prime Minister to Ehud Barak of Labor.  When Ariel Sharon was elected Prime Minister in 2001, Livni was named Minister without Portfolio, while Netanyahu became Minister of Foreign Affairs - Livni's current position.