That Israel is deeply fractured politically after its recent election to select a prime minister has become much more obvious now that Mr Ehud Barak has finally resigned as Labour Party chairman. A national unity coalition remains an active possibility under his successor as prime minister, Mr Ariel Sharon. Attitudes towards the Middle East peace process are one central question. But for many Israelis it is equally important to resolve profound disagreements on the nature of their society, especially on whether secular or religious values should determine its future. Israelis have been shocked by the opportunist and zigzag path that brought Mr Ehud Barak back into negotiations to form a government in which he would be defence minister so soon after his spectacular rejection by the electorate. A rebellion in the Labour Party over the last few days, driven by sheer frustration with Mr Barak's arrogant style, has destroyed that prospect. The party remains deeply split on whether to support a national coalition, but Mr Barak's departure may ease the way for the party to agree on it. A new complicating factor is the likely inclusion of two extreme nationalist parties in Mr Sharon's proposed government.
The presence of senior Labour Party figures in his government would give Mr Sharon political cover at home and abroad against those who expected his election to bring immediate escalating armed confrontation with the Palestinians. After the continuing conflict of the last four month negotiations between Mr Barak and the Palestinian Authority reached a complete impasse. Mr Sharon has had to recognise that Israelis voted not against peace, but against Mr Barak. That is why he prefers a grand coalition to a narrow right-wing one.
The fear that Palestinian-Israeli confrontation could spill over into regional war will keep the attention of the United States and European powers on the question. Realistically it does not look as if the Oslo peace process can be reinstated; more incremental approaches are to be expected. It would suit both parties in any large coalition to keep the alternative Likud leader, Mr Benjamin Netanyahu, as far away from power as possible. He is biding his time for fresh parliamentary elections, which could come sooner than 2003 if a government led by Mr Sharon disintegrates. This uncertain period could give the United States, Europeans and Arabs an opportunity to re-engage with Israel and with the Palestinians. Immediate steps must be taken to relieve the pressure on the Palestinian population imposed by cutting off the occupied territories. But that will require a halt to protests and violence. It is a tall order for a Palestinian authority weakened by popular opposition and the collapse of its negotiating strategy with the Barak government, on which neither side was able to deliver.