Sharon invited Labor to join his fragile coalition government earlier Monday. The union would strengthen Sharon as he pushes forward with his plan to withdraw from the Gaza Strip and four West Bank settlements.
Sharon's plan to withdraw from the Gaza Strip and dismantle 21 settlements there has alienated his traditionally hawkish allies, reports CBS News Correspondent Robert Berger, so he's turning to Shimon Peres' Labor party to try to keep the plan on track.
Sharon currently leads a minority government due to defections from hard-line parties, and hawks from Sharon's Likud Party, like Yuli Edelstein, don't think Likud needs to or should accept the dovish Labor Party into its coalition.
"I think we have a good chance to reach the majority," Edelstein said.
Sharon met with Likud lawmakers Monday afternoon to discuss his invitation to Labor. Participants in the meeting said that Sharon threatened to push for new elections if the party doesn't back him.
"If you don't want this or that, we can go to elections. That's the way it is," Sharon said. "I am saying this in the clearest possible way: This situation cannot continue."
Polls show that Sharon and the Likud would fare well if new elections were held. However, the make-up of the government and parliament would change, and many members of the current government could risk losing their positions.
New elections would also likely delay Sharon's "disengagement" plan, which the government says is necessary to prevent Palestinian attacks and help preserve Israel's Jewish character by separating the two peoples. The plan still requires Cabinet and parliamentary approval to be implemented.
Key sticking points remain in the talks with the opposition. Labor expects to be given senior Cabinet posts, including that of foreign minister for party chief Shimon Peres. However, senior Likud ministers now holding these jobs have threatened to stir a rebellion in the party if removed from their posts.
The talks occurred as U.S. Mideast envoys were in the region to discuss the Gaza withdrawal plan. White House officials Elliot Abrams and Steve Hadley were to meet with Palestinian Prime Minister Ahmed Qureia on Monday and with Sharon on Tuesday, an Embassy spokesman said.
Sharon and Peres met privately for an hour Monday morning. Both sides said the talks had gone well.
Officials close to both men said they expected a deal soon.
Labor lawmaker Haim Ramon said negotiations became a realistic option after three conditions were met: Sharon's government accepted the Gaza withdrawal plan; the ultranationalist National Union left the coalition in protest of the planned pullout; and the attorney general decided not to charge Sharon in a corruption case.
"Those were the conditions and now we will open negotiations on a range of issues," he told Israel Radio.
By September 2005, Sharon plans to withdraw from all of Gaza, where 7,500 Jewish settlers live amid 1.3 million Palestinians, and uproot four isolated settlements in the West Bank.
The withdrawals are part of his "unilateral disengagement" plan, which he says will boost Israel's security and preserve Israel's Jewish character by giving up areas with large Arab populations. Sharon refuses to negotiate directly with the Palestinians.
In a recent interview, Peres said he would not join the government unless Sharon agrees to resume talks with the Palestinians and to commit to a much larger withdrawal from the West Bank.
But both sides said Monday that the two men have agreed to put aside these differences. The main remaining sticking point is what post Peres will fill.
Peres, an 80-year-old former prime minister, is widely believed to want to return to a position of power, while Sharon needs Labor to carry out the withdrawal. The two are the last members of Israel's founding generation still active in politics, and have been coalition partners before, despite their political differences.
Peres covets the foreign minister's post, officials said. But the job is currently held by Silvan Shalom, a powerful figure inside the Likud Party.
Hanan Crystal, an Israeli political analyst, said that Peres would likely receive an influential post with a different title.
"In the end the real question is who has the influence ... I assess it will be a Sharon-Peres government," Crystal said.
Other potential obstacles remain. Finance Minister Benjamin Netanyahu has expressed concern that Labor would hamper his economic reforms.
Netanyahu's chief rival, Amir Peretz, a Labor legislator and union leader, opposes a unity government.
Inside the Likud, many hard-liners also oppose a union. "If the Labor Party enters the coalition it will bring a cancer into the Likud," said Uzi Cohen, a member of the party's powerful Central Committee.
On Sunday, Palestinian militants from the Al Aqsa Martyrs' Brigades, a violent group linked to Yasser Arafat's Fatah movement, blew up a bus stop in Tel Aviv, killing a female soldier and seriously wounding five people.
It was the first deadly bombing in Israel since March.
Sharon tied the bombing to last week's advisory ruling by the world court against the West Bank separation barrier. Israel says it needs the barrier to keep out attackers.
"The decision sends a destructive message to encourage terrorism and denounces countries that are defending themselves against it," Sharon said.
Sharon on Sunday ordered construction to continue, in line with a recent Israeli Supreme Court decision, his office said.