Netanyahu quits over Gaza withdrawal

Israel's Finance Minister, Benjamin Netanyahu resigned from the government on Sunday, claiming that its plan to withdraw from settlements in the occupied territories would allow the creation of a base for "Islamic terrorism."

In what is widely seen as a prelude to a challenge to the leadership of Prime Minister Ariel Sharon, Netanyahu submitted his letter of resignation as the Cabinet met to rubber stamp the first phase of the evacuation of settlements in Gaza.

"I am not prepared to be a partner to a move which ignores reality, and proceeds blindly toward turning the Gaza Strip into a base for Islamic terrorism which will threaten the state," he wrote.

Netanyahu voted against the proposal to pull out of the settlements of Morag, Netzarim and Kefar Doron next week, which was carried by 17 votes to five.

The withdrawal from these settlements is the first phase in Sharon's plan to return the entire Gaza Strip to the Palestinian Authority. Analysts say the resignation is unlikely to have any effect on this disengagement, but will increase political instability.

The rivalry between Sharon and Netanyahu is intense and his resignation or dismissal was always a possibility.

Netanyahu, who was prime minister between 1996 and 1999, was defeated by Sharon in a vote to lead the Likud party in 2002.

He has introduced free-market reforms, which have pleased the financial markets but increased poverty.

Analysts that by staying in the Cabinet until now, Netanyahu has ensured that Israel will withdraw from the settlements, and by resigning can claim he opposed the plan if it backfires in the future.

They point out that he was careful to frame his rejection of the withdrawal in an ambiguous way, attacking its unilateral nature rather than the plan itself. `

"There is a way to achieve peace and security, but a unilateral withdrawal under fire and with nothing in return is certainly not the way," he wrote.

He called the disengagement "an irresponsible step which will endanger Israel's security, split the people, institute the principle of return to the 1967 borders, and in the future, endanger Jerusalem as well."

In Israel, Netanyahu, with his US education and fluent English, is seen as an articulate advocate of Israel's interests in the international arena, but polls suggest voters do not trust him.

Before the Cabinet meeting, Shaul Mofaz, the defense minister, attacked Netanyahu for his inconsistency on disengagement.

"You cannot dither in the wind every morning anew and say `My opinion's cent,'" he said.

A spokesman for Yesha, which is the settlers council, described Netanyahu's resignation as "commendable," but other prominent rightwing members saw it as opportunistic.

Israel Harel, a founder of the settler movement, said Netanyahu's resignation was too late to assist the anti-disengagement camp.

"This is not the act of a real leader. If he wanted to bring about change he had to resign a long time ago," he said.

Sharon has appointed his deputy, Ehud Olmert, as finance minister.

A week before Israel's withdrawal from the Gaza Strip is scheduled to begin, most settlers have applied for compensation for their upcoming evacuation from their homes, Israel Radio reported yesterday.

More 1,000 of the about 1,700 families who will be evacuated have submitted application forms to the Israeli government, which has thus far approved nearly 500. More than half of those approved have already been paid out, the radio said.

The applications for compensation are a sign that many settlers have come to realize that they will not succeed in preventing the Gaza withdrawal, but radical opponents have declared they will resist it.

Israeli have arrested nine Israelis for smuggling protesters against the pullout into the Gaza Strip, which has been declared a closed military zone and off-limits to non-resident Israelis. The pullout is scheduled to start on Aug. 15 or within 48 hours of that date.