Israel's Prime Minister-elect, Mr Ariel Sharon and its caretaker prime minister, Mr Ehud Barak, reached agreement in principle last night on establishing a "national unity government".
Mr Barak is to serve as Minister of Defence, and another colleague from his Labour Party, possibly a former prime minister Mr Shimon Peres, will be named Foreign Minister, giving Mr Sharon's coalition a far more moderate leadership than many had anticipated.
Although "policy guidelines and coalition agreements" with other potential government partners have yet to be resolved, according to a statement issued by Mr Barak last night, it seems likely that Mr Sharon, who defeated Mr Barak by a staggering 25 per cent in prime ministerial elections last week, will be able to have his government approved by the Knesset and sworn into office in the next few days.
Mr Sharon's Likud Party and Mr Barak's Labour will each have seven government ministers.
Mr Barak's acceptance of the defence ministry post represents a startling volte face since, in conceding defeat to Mr Sharon last week, he had declared that he was going to take a break from politics. This readiness to reverse himself is now attracting increasing criticism from opponents both outside and within Labour, with Mr Haim Ramon, a Labour rival, describing it last night as "one zigzag too many" and urging Mr Barak to honour his promise to step out of the fray.
As the coalition talks continued through the day, five of the eight latest Israeli victims of the ongoing bitter confrontation with the Palestinians were buried - having been killed on Wednesday when a Palestinian bus-driver ploughed into a crowd of soldiers and civilians at a bus stop south of Tel Aviv. Israeli news reports said yesterday that the driver, 35-year-old Mr Gazan Khalil Abu-Olbeh, has now acknowledged to investigators that this was a premeditated attack.
In Gaza, meanwhile, Nasser Hassanat was also buried, having been shot dead by Israeli troops overnight. The Israeli army said that Hassanat (23), a member of one of the Palestinian security networks, had been trying to break into the Gaza Jewish settlement of Kfar Darom, and had been killed in an exchange of gunfire.
Almost five months of violence have now seen some 400 people killed, including more than 300 Palestinians, over 50 Israelis and 13 Israeli Arabs. The Palestinian Authority President, Mr Yasser Arafat, yesterday accused Israel of deliberately escalating the conflict, and charged that its forces were using "depleted uranium" and "poisonous gases". Palestinian television has shown alleged victims of such gases, twisting in pain. Israel's military officials emphatically deny the allegations and its political leaders are pleading with Mr Arafat to issue a public call to his people to stop the violence and prevent the broadcast of what they call "anti-Israel incitement" on Palestinian television.
President George Bush, fast discovering that he may not be able to take the "hands off" approach to the Middle East that his advisers had said he was envisaging, has called on both sides to work to restore calm, but the violence seems to be spiralling out of control. In the wake of Wednesday's deaths, Israel has again sealed off the West Bank and Gaza, preventing thousands of Palestinians from entering Israel to work. The closure is designed as a security measure but Israeli officials acknowledge that it deepens the economic crisis in the Palestinian territories, breeding further anger and more potential violence.