Would-be Prime Minister Tzipi Livni announced Saturday night she will tell President Shimon Peres early Sunday morning she is throwing in the towel on trying to form a new government coalition and will opt for new elections. Her decision followed a demand by Shas chairman and Cabinet minister Eli Yishai, that she state whether she would agree to allow the Palestinian Authority to take over large areas of eastern Jerusalem and possible declare it as its capital. Yishai, who has been wooed by Likud, told reporters on Friday, "Shas cannot be bought…. Jerusalem is not for sale." The Kadima party, which she has headed since the recent party leadership vote, accused Shas of "deceiving the country" by continuing to negotiate until Thursday night. Livni compromised on the Shas party demands for increases in aid for child support and religious institutions. Shas refused the compromise, and Livni then offered the Sephardic religious party more power in religious court matters. However, Rabbi Ovadia Yosef, former chief rabbi of the country and the party's spiritual advisor, told Shas chairman Eli Yishai to close the door on joining the coalition because of Livni's refusal to state her position on the status of the capital. Shas chairman Eli Yishai to close the door on joining the coalition because of her refusal to state her position on the status of the capital. Kadima Knesset Member Tzachi HaNegbi, chairman of the powerful Knesset Foreign Affairs and Defense Committee, backed her, stating that she cannot make any commitments on matters that are under negotiations with the Palestinian Authority. However, he did not say if there are any "red lines." The most likely date for elections is between mid-January and mid-February. President Peres has three days to make the rounds of party leaders, who almost certainly could not form a coalition even if they wanted to do so. The Knesset has three weeks to find someone to lead a government or vote to dissolve the government and call elections. If it does not, the President will do so at the end of the 21-day waiting period. Analysts have noted that Foreign Minister Livni made several mistakes since she was elected Kadima leader. The moment she decided to try to form a new government just before the busy Jewish holiday period, she was hemmed in by a legal deadline she could not meet. She also erred on Shas, which outmaneuvered her while leaving Likud chairman Binyamin (Bibi) Netanyahu with the opportunity to exploit her undeclared position on Jerusalem . New elections also will likely be the last nail in the coffin of United States President George W. Bush's hopes for some kind of a final agreement with the Palestinian Authority on a new Arab state within Israel 's current borders. He is legally restricted from making major policy changes during a transitional government. The political instability also freezes two other issues: efforts to free kidnapped IDF soldier Gilad Shalit and a decision on whether to indict Prime Minister Olmert for criminal offenses, as recommended by police fraud investigators. The office of the Attorney General already has said he will not be indicted while serving as interim Prime Minister. It also is unlikely that the transitional government could conclude a deal to free Shalit because his captors demand that Israel release convicted terrorists, a move that the Cabinet is not likely approve on the eve of elections.
