In a surprise turnabout, Israeli Prime Minister Benjamin Netanyahu has decided to cancel the early elections he had called just 24 hours before and instead form a unity government with the opposition party Kadima, Israeli officials said Tuesday.
The decision shocked much of Israel's political establishment, which was gearing up to dissolve the parliament, or Knesset, and launch campaigns for a Sept. 4 vote.
By joining the government coalition, newly elected Kadima Chairman Shaul Mofaz avoids facing voters amid polls indicating that his centrist party would lose more than half its Knesset seats. Just a month ago, Mofaz declared he would not join the government and vowed to unseat Netanyahu.
In exchange, Mofaz has been promised a ministerial position in the government, officials said. His predecessor, Tzipi Livni, had rejected calls to join Netanyahu's government, saying it was not serious about reaching a peace deal with Palestinians.
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For Netanyahu, the deal means he can retain his government, which many consider to be one of the nation's most stable, and reduce his dependence on smaller nationalist and religious parties, whose conservative agendas have dominated his coalition.
The primary loser will be the recently reformed Labor Party, which polls suggested was preparing to make a big comeback in the September vote to become the nation's second-largest party.
As they woke up Tuesday to the news, other political parties condemned the deal, calling it a cynical power grab that would backfire with Israeli voters.
Labor lawmaker Isaac Herzog called the new unity government an "alliance of cowards.... This is a golden opportunity for Labor to lead the people on a different course from that of Netanyahu and Mofaz, if not now, then in 2013," he wrote on his Facebook page, referring to next year's regularly scheduled vote.
There were questions about how long the unity government would last given the stark differences over certain issues, such as Palestinian peace talks. Mofaz is expected to push for a more aggressive effort to restart negotiations, which some right-wing members of Netanyahu's Likud are already warning could hurt West Bank settlement expansion.
One particularly divisive issue is a plan to begin drafting fervently-Orthodox young people into the army. Netanyahu and Mofaz both support the move, though the religious party Shas is staunchly opposed and had threatened to quit the coalition if the government adopted it. With the votes Kadima brings to the new coalition, such threats would not bring down the government as feared.
Hanan Crystal, a political commentator for Israel Radio, predicted Tuesday that the new unity government would allow Netanyahu to pursue a more centrist policy in dealing with Palestinians and other social issues in Israel. He called it the "move of a super-statesman."