The center-left Labor Party agreed Wednesday to join a coalition government led by Prime Minister Yitzhak Shamir and his right-wing Likud Party, state-run Israel radio reported.
The decision, ending seven weeks of political maneuvering after the Nov. 1 election, means Israel's two largest parties will reunite in an uneasy coalition similar to one that has governed the country for the past four years."If a government of the Likud and the religious parties was formed, then there would be a continuation of the process of annexation (in the occupied territories) and the process of isolation," Foreign Minister Shimon Peres told his party's Central Committee shortly before it voted in favor of the agreement.
Labor Party officials approved the coalition proposal just one day after Shamir persuaded his Likud Party to approve the agreement in a stormy seven-hour convention in which members repeatedly jeered and booed the Israeli leader.
The Likud vote, which was not counted until about 4:30 a.m. Wednesday, was 796-642 in favor of the coalition with Labor. The Labor Party approved the agreement shortly before 4 p.m., but the exact count was unavailable, Israel radio reported.
Shamir, in an appeal for unity, told party members prior to the vote that Israelis must stand united against international pressure for the creation of a Palestinian state.
"We must work in cooperation, despite differences of opinion, against the danger of a Palestinian state," Shamir told the Likud Central Committee amid a chorus of catcalls. "Most of the Israeli population sees in this (Palestinian) state an extreme danger to our existence, and this obligates us to unite against this danger."
Industry and Trade Minister Ariel Sharon, the former defense minister, said a vote for the coalition would breach the agreements he had negotiated with the smaller religious and right-wing parties.
Under the agreement, Shamir would remain prime minister for the four-year term and Peres would control the Finance Ministry and remain vice premier. Likud leader Moshe Arens would become foreign minister and Yitzhak Rabin, the No. 2 Labor leader, would remain defense minister.
Likud and Labor have governed Israel for the past four years in a "national unity" coalition often bitterly divided and unable to pursue a consistent policy on Middle East peace.
Labor favors territorial compromise in return for peace, while Likud rejects giving up any territory in the West Bank and Gaza Strip and backs a plan that would offer limited autonomy for residents of the occupied territories, where a year-old Palestinian uprising against Israeli occupation is raging.
Despite the previous coalition government's track record, Peres said the new coalition has committed itself to working toward Middle East peace and would allow Palestinians in the occupied territories to participate.
Peres said the coalition agreement stipulates that Likud and Labor would have an equal number of ministers in the Cabinet to prevent Likud from pushing through its own peace proposals.