JERUSALEM (AP) -- Efforts to resolve Israel's coalition crisis failed Wednesday, negotiators said, and the Labor Party appeared ready to bolt Prime Minister Ariel Sharon's coalition over funding for Jewish settlements.
Defense Minister Binyamin Ben-Eliezer, the head of the Labor Party, submitted his resignation to Sharon after a stormy three-hour negotiating session in a parliament meeting room.
"We did everything possible to preserve the government, but to my great regret there were those who believed that this was the time to break up the government," said Finance Minister Silvan Shalom of Sharon's Likud Party.
Labor legislator Haim Ramon, who is challenging Ben-Eliezer for party leadership in Nov. 17 primaries, praised the decision. "I'm happy that we will not be partners in a government that is a failure in all aspects of life," Ramon said. "We need to leave the government and present an alternative."
With the apparent breakup of the coalition, Israel appeared headed for early elections, possibly within 90 days. The scheduled vote is in November 2003.
Sharon can continue governing with a narrow coalition that rests on small far-right factions, but such a constellation is highly unstable.
The crisis, the most serious in Sharon's 20 months in office, could hurt U.S. efforts to win support for a three-phase peace plan that envisions a provisional Palestinian state by 2003 and full independence by 2005.
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