A reluctant Ariel Sharon on Tuesday called early elections for Jan. 28 after the breakup of his fractious coalition, sending Israel into a tempestuous campaign that threatens further instability in the Mideast at a time of a possible confrontation with Iraq.
The surprise move also brought Sharon's archrival for Likud leadership, Benjamin Netanyahu, back into government as temporary foreign minister. Netanyahu said he will challenge Sharon for the party leadership in a primary to be held within weeks.
The winner of that struggle will face the Labor Party leader in the general election. One of the issues on the table then will be how to approach the Palestinians, whether to emphasize negotiation or war and whether to expel Arafat.
On Tuesday, Netanyahu reiterated his long-standing view that Palestinian leader Yasser Arafat should be expelled and said the explusion could come 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."
The dramatic political developments underscored the growing political volatility in Israel, which has had five prime ministers in seven years. Sharon's coalition lasted only 20 months, despite his aim to hang on until next October, the originally scheduled election date.
Sharon flip-flopped over 24 hours, saying Monday it would be irresponsible to hold early elections, and announcing Tuesday he was dissolving parliament because he was unable to set up a stable coalition after the departure of the moderate Labor Party.
Sharon accused Labor of "political caprice" by bolting over Sharon's refusal to cut funding to Jewish settlements in the West Bank and Gaza Strip.
Palestinian reaction was muted. "We hope the Israeli people will elect a government that can deliver peace," said Cabinet minister Saeb Ereket.
The elections could well be influenced by the Palestinian militant groups Hamas and Islamic Jihad, which boasted Tuesday their bombing and shooting attacks on Israelis led to Sharon's downfall.
In the past, suicide bombing campaigns by Palestinian militants strenghtened Israel's hawkish right. Both Hamas and Islamic Jihad vowed to continue such attacks during the race.
"Sharon's failure is one of the achievements of the uprising," said Ismail Abu Shanab, a Hamas leader in the Gaza Strip.
On Monday, an Islamic Jihad bomber killed himself and two Israelis in a shopping mall in central Israel — and Hamas said there would be more attacks during the election campaign.
The violence has pushed Israelis to the right amid growing disillusionment with Arafat, who has done little to stop the attacks.
However, the result of the election could be yet another Likud-Labor coalition.
Both Sharon and Labor chief Binyamin Ben-Eliezer face internal challenges.
In Labor's Nov. 19 election for a new leader, Ben-Eliezer — who as Sharon's defense minister oversaw military offensives against the Palestinians — trails a pair of more dovish candidates, legislator Haim Ramon and Haifa Mayor Amram Mitzna, a retired general.
Likud's primaries will take place in coming weeks. Initial polls suggested Netanyahu, who was voted out of office in 1999, would wrest the party leadership from Sharon, but more recent surveys indicated he had fallen behind.
Winners of the Labor and Likud primaries will be their parties' candidates for prime minister. Israel is returning to an indirect electoral system, with voters choosing a party, not a prime minister. The politician first able to form a stable coalition will become premier.
Labor leaders have suggested they will try to focus the campaign on the hobbled economy instead of the conflict with the Palestinians, an issue where Likud's harder line is currently more popular.
Pollster Hanoch Smith said even though the right-wing bloc led by Likud currently enjoyed more support than the more moderate bloc led by Labor, more than one-fourth of Israelis are undecided, including many former supporters of dovish parties.
Tuesday's drama took Israelis by surprise. After Labor bolted last week, there had been expectations Sharon would eventually call early elections, but many believed he would spend more time courting the far-right National Union-Israel Beitenu faction, which could have helped him regain a narrow parliamentary majority.
However, that grouping demanded an outright rejection of a U.S.-backed peace plan that envisions a provisional Palestinian state by 2003 and full independence by 2005. A U.S. envoy is expected in the region this month to collect responses from Israel and the Palestinians to the proposal.
Sharon said he would do nothing to "harm the deep strategic understandings with the United States."
Hours later, Netanyahu agreed to Sharon's weekend offer to serve as foreign minister.
This set up an extremely awkward arrangement in which the country's two leading right-wing politicians will be working together to deal with the conflict with the Palestinians — but also engaging in furious competition.
Netanyahu insisted it's not a problem. "We've had the ability to work together in the past and we have the ability to work together in the present," he said, noting Sharon previously served as his foreign minister.
The campaign will be held amid fears that Iraq could attack Israel if the United States launched a war to topple Saddam.
Asked how he felt about the possibility of Israelis voting while wearing gas masks, Sharon said: "I don't think it's responsible to talk about that sort of thing."