Olmert seeking Israeli coalition with Labour

Israeli Interim Prime Minister Ehud Olmert plans to announce talks for a joint government with the leftist Labour Party, according…

Israeli Interim Prime Minister Ehud Olmert plans to announce talks for a joint government with the leftist Labour Party, according to political sources.

Mr Olmert and Labour Party leader Amir Peretz "are going to announce a formal entry into negotiations" for a new coalition after Mr Olmert's victory in the March 28th national election, a political source said.

A joint news conference is scheduled for later today.

Mr Olmert's centrist Kadima party won just 29 seats in the 120-member parliament, which means he must form a coalition with other parties in order to rule.

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Mr Peretz's Labour Party, which won 19 seats, is the largest and most likely partner for Kadima, which campaigned on a platform to unilaterally set Israel's borders with the Palestinians by 2010.

The launch of Kadima's talks with Labour came amid expectations that President Moshe Katsav will formally designate Mr Olmert as the new prime minister as early tomorrow. Once named by Mr Katsav, Mr Olmert would have 42 days to form a government.

The decision to negotiate with Labour follows a secret meeting at which Mr Olmert agreed to offer Mr Peretz a senior cabinet post, possibly the defence ministry, the source said.

The prestigious post was offered to Mr Peretz, a former trade unionist, in a bid to persuade him to drop a demand for the finance ministry.

Kadima fears Labour's demands for increased social spending would strain the state budget and make financial markets nervous