Everyone knew it was coming, but it still took them by surprise: Prime Minister Sharon announced last night that he had invited Opposition Leader Shimon Peres for talks on the establishment of a national unity government. Speaking at an economic conference in Jerusalem last night, Sharon said that if the current make-up of the government does not enable him to "proceed in the diplomatic sphere" - i.e., the disengagement/retreat plan - he will form a new coalition. He said that the upcoming budget would include a clause for the financing of the disengagement.



Peres, known to be enthusiastic about joining such a government, responded this morning with a series of demands. He said that the withdrawal must not be unilateral, but rather undertaken amidst dialogue with the Palestinian Authority. Peres also said that Finance Minister Binyamin Netanyahu's economic policies are not acceptable to the Labor Party. Prime Minister Sharon said yesterday, however, that he is pleased with Netanyahu's job and plans to continue working with him.



Likud MKs who oppose the disengagement also object to the inclusion of Labor in the coalition. Minister Uzi Landau will convene about a dozen of them in his office on Sunday to decide how to respond to this threat. Other ministers also oppose the inclusion of Labor, including Netanyahu and Foreign Minister Silvan Shalom. Some Labor MKs, as well, oppose joining a unity government, including Yuli Tamir, Eitan Cabel, Collette Avital and Amir Peretz.