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Prime Minister Ariel Sharon's Likud Party is favored to emerge as Israel's strongest faction in an abbreviated election campaign, and Sharon holds a slim edge over his main rival for party leader, Benjamin Netanyahu, according to polls published Wednesday.

Israel's political turmoil has been the focus this week, but there's been no letup in Mideast violence. A Palestinian laborer shot and killed two Israelis, including his employer, in the Gaza Strip settlement of Slav on Wednesday before being gunned down by a security guard. The militant group Hamas claimed responsibility.

Despite a long rivalry with Sharon, former Prime Minister Netanyahu agreed to serve as foreign minister in Sharon's caretaker government. Parliament approved the appointment in a 61-31 vote Wednesday.

Secretary of State Colin Powell telephoned Netanyahu to congratulate him, and the two agreed to "establish a direct line of communication," the Israeli foreign ministry said in a statement.

Another new appointment, Defense Minister Shaul Mofaz, talked by telephone to Egyptian President Hosni Mubarak, the Defense Ministry said.

Though they are facing in a primary election, Netanyahu said he saw no problem in working with Sharon before or after that ballot.

"Both of us have served as foreign minister, both of us have served as prime minister and I have no doubt that we can work perfectly well together," Netanyahu said.

However, Netanyahu said he and Sharon should make a joint statement saying the winner of the upcoming Likud party leadership race can count on the other's support.

In Israel's tumultuous politics, such unlikely alliances are common.

The caretaker government will be in office less than three months and is not expected to make major policy decisions. The United States recently proposed a "road map" for relaunching Mideast peace negotiations, but Netanyahu said he believed that was on hold for now.

"We are facing a real possibility in the coming weeks and months of an American attack on Iraq, and I think that is the real thing on our international agenda and that will take precedence over everything else," he said.

The electoral system leads to unwieldy coalition governments that are chronically unstable. No government has completed its full four-year term since the 1980s. The country has had five prime ministers in the past seven years, and now faces its third national election in less than four years.

The alliance between Sharon and Netanyahu is seen as part of a competition between the two, with each trying to win points with Likud voters for seeming to place national interest ahead of the rivalry.

No date has been set for the Likud primary. Sharon wants to hold it soon, perhaps later this month, while Netanyahu wants more time to campaign.

Sharon leads Netanyahu by 44 percent to 38 percent among Likud members, according to a poll by the Dahaf institute published in the Yediot Ahronot daily. The survey had a margin of error of 4.2 percentage points.

Speaking to reporters, Netanyahu expressed confidence he would win the leadership race. "What people are looking for today is a way to get the country out of the mud," he said. "I believe I have that way."

The Labor party, which has the largest number of seats in the outgoing parliament, holds its leadership contest Nov. 19. Party chief Binyamin Ben-Eliezer, the recently resigned defense minister, faces two dovish candidates, Haifa Mayor Amram Mitzna and legislator Haim Ramon.

Sharon dissolved parliament Tuesday and called the new elections. The move came after Labor left the coalition last week, citing Sharon's refusal to cut funding to Jewish settlements in the West Bank and Gaza Strip.

The Dahaf poll indicated Sharon had the best chance of winning the prime minister's job in the election. Under the electoral system, voters choose a party, not a candidate. The party leader first able to form a coalition is named prime minister.

The poll indicated Likud would win 33 seats in the 120-member parliament, up from 19, and emerge as the strongest party. Israel's right wing, overall, would make strong gains, the poll said, giving Likud a better chance than Labor to form a coalition. Labor would lose seven seats and drop to 19, the poll said.

Another survey by the Geocartographia agency showed 34 percent of respondents preferred Sharon as prime minister, 29 percent favored Netanyahu, 15 percent chose Mitzna, while 3 percent each gave their backing to Ben-Eliezer and Ramon.

Sixteen percent either had no opinion or didn't like any of the candidates. The survey among 500 Israeli adults had an error margin of 4.3 percentage points.

The general election is tentatively set for Jan. 28, though legislators have the option of moving the date up two weeks.

A central campaign issue will be how to deal with the Palestinians and the ongoing violence.

Netanyahu said Tuesday that Palestinian leader Yasser Arafat should be expelled from the Palestinian territories, preferably during a U.S. strike against Iraq.

"I think the most appropriate time will be when Saddam Hussein is thrown out," Netanyahu told Israel TV. "I think that will be possible."

Responding to Netanyahu, Arafat said Wednesday: "No one can deport me from my homeland ... They have to remember that they are dealing with Yasser Arafat."