Sharon calls election after failing to find new coalition

Israel launched itself into a turbulent season of elections yesterday after Ariel Sharon acknowledged defeat in his efforts to replace the national-unity government that collapsed under him last week with a narrow coalition of right-wing and religious parties.

The Prime Minister asked President Moshe Katzav to dissolve the Knesset, which had another year to run, and set elections for the last week in January. Before then, both main parties, Likud and Labour, will hold fiercely contested primaries to select their candidates for the premiership.

Neither Mr Sharon nor Labour's former defence minister, Binyamin Ben-Eliezer, can be sure of retaining the nomination. Polls have shown Mr Sharon running neck-and-neck with his Likud rival, the former prime minister Binya-min Netanyahu, and Mr Ben-Eliezer against the mayor of Haifa, former General Amram Mitzna, and a former interior minister, Haim Ramon.

Mr Netanyahu stirred muddy waters by agreeing to serve as Foreign Minister in what remains of Mr Sharon's term. The lame-duck Prime Minister will present the nomination for approval to MPs today, now Mr Netanyahu is no longer setting conditions and his return is popular with the party.

Their elaborate poker game, with each bluffing and counter-bluffing, ended after Mr Sharon set a date for elections. That had been a non-negotiable demand from the young pretender. "We know," an unblushing Mr Netanyahu told reporters, "that we are in the toughest security situation. We know we are on the eve of a war in Iraq. I told the Prime Minister I am willing to take on the position of Foreign Minister."

Mr Netanyahu, who has taken a harder anti-Palestinian line out of office than Mr Sharon has in office, is unlikely to shift policy further right. Mr Sharon chose to go for early elections rather than humiliate himself by horse-trading with the far-right National Union-Israel Beitenu. He needed their seven seats to form a majority government, but they tried to drive too hard a bargain. They wanted him to reject the Bush administration's "road map" for renewing negotiations leading to a Palestinian state; to repudiate the 1993 Oslo accords; to exile Yasser Arafat, and to forswear another national-unity government after a general election due by October 2003.

The last thing Mr Sharon, an avuncular candidate wooing the middle ground, wanted was to alienate voters with a government of extremists. Nor would he jeopardise Washington's friendship or divert Arab states from supporting, however tacitly, an attack on Saddam Hussein. "I will not change the guidelines of the government," he said. Those guidelines, signed by all the parties that joined Mr Sharon's first government in March 2001, committed Israel to seek peace with all the states and people of the Middle East.