Compromise Saves Israel Coalition : Mideast: Ezer Weizman resigns from the Inner Cabinet but is allowed to stay on as science minister.

JERUSALEM —  Prime Minister Yitzhak Shamir averted the collapse of Israel’s coalition government Tuesday by rescinding his dismissal of Ezer Weizman, a Cabinet minister who had made contacts with the Palestine Liberation Organization. In a compromise move, Weizman resigned from the so-called Inner Cabinet.

Shamir met briefly with Weizman an hour before the dismissal was to become effective and gave him a letter voiding the dismissal notice he had handed him two days earlier. Under the arrangement, Weizman remains in the larger Cabinet but is barred from the Inner Cabinet for 18 months, after which Shamir may consider reinstating him.

The Labor Party, of which Weizman is a member, had threatened to bolt the shaky coalition with Shamir’s Likud Party unless Weizman was reinstated. A breakup of the government would have derailed the Middle East peace process being promoted by the Bush Administration.

Labor and Likud have both stepped back from the brink of breakup on several occasions in the year since the coalition was formed. Both are apprehensive about the possibility of being forced to arrange a new coalition with minor parties or going to new elections against a backdrop that includes the two-year-old Arab uprising, pressure from Washington to move forward with the peace process and hard times economically.

Shamir said the compromise “served the national interest” and was a warning to individuals who break the law and “contact the enemy.” He gave no reason for his change of heart.

Shamir has been resisting what he views as an effort by Washington to get him to talk, at least indirectly, with the PLO. His spokesman, Avi Pazner, expressed hope that the Bush Administration would learn something from the Weizman crisis.

“Maybe U.S. policy-makers will better understand the depth of Mr. Shamir’s opposition to any dealings with the PLO,” Pazner declared.

Weizman, who stays on as science minister, indicated that pressure from members of his party led him to accept the compromise. He was an architect of the 1979 Camp David accords that led to a peace treaty with Egypt, and he openly supports talks with the PLO.

“They said that this is the best conclusion for the party and for the issue,” Weizman said. “This was the agreement in order that the government could continue. First of all, the crisis is over. Second of all, all the attempts to say that I am guilty or not guilty, I do not accept.”

Weizman seemed to indicate that he will not talk with the PLO again. “I will continue with activities--I hope with activities that will not bring such developments (as the dismissal attempt),” he said.

The compromise was reached by Defense Minister Yitzhak Rabin, representing Labor, and Justice Minister Dan Meridor, representing Likud.

Sources said Shamir underestimated the willingness of Labor to pull out of the government over the issue of talks with the PLO. They said that Shimon Peres, the Labor Party leader, was surprisingly firm on getting Weizman reinstated.

With the compromise in place, observers quickly began to appraise the political fallout. There was wide agreement among independent commentators and some members of Likud that the compromise made Shamir appear unsure of himself.

A Likud source close to the proceedings said Shamir had paid a price in credibility for allowing Weizman to retain his Cabinet post.

“There is clearly a gulf between the enormity of the charges made by the prime minister and the minute punishment given to Weizman,” this source said.

Arye Naor, a political commentator and former Likud government official, said, “It shows that Shamir is not taking himself seriously.”

And an official in the Foreign Ministry, which is in Likud hands, said: “Shamir outmaneuvered himself. There were too many uncertainties in bringing down the government, and he did not want to face them.”

One of the uncertainties is Shamir’s hold on his party: If Labor revolted and new elections were called, Shamir would probably face a battle for party supremacy.

“If one can believe Shamir’s charges against Weizman, then the result should not only have been dismissal but also criminal proceedings,” said Shaul Ramati, a former Israeli diplomat. “Shamir is obviously comfortable with Labor in government.”

Labor did not emerge unscathed, however. Although Weizman’s job was saved, the party was left with an image of waffling on important issues, observers said. Labor reaffirmed its agreement with Shamir that PLO talks are taboo, but in the same breath it rallied around a minister who was caught making contact with the group.

“Labor’s reputation for double-talk is alive and well,” commentator Naor remarked.

Defense Minister Rabin was perhaps the sole winner, some observers said. He is the strongest proponent of staying in the government, where he holds a position second in importance only to that of the prime minister. In contrast, party leader Peres holds the less glamorous post of finance minister.

Rabin is the author of the peace plan submitted to Washington based on Palestinian elections in the occupied West Bank and Gaza Strip. Weizman’s PLO contacts verged on upsetting the plan by making prominent a PLO role--still the subject of conflict between the United States and Israel and within the Labor Party.

The Shamir government and the Bush Administration are engaged in laborious negotiations aimed at getting peace talks off the ground. The plan centers on efforts to name a Palestinian delegation to negotiate the terms of elections in the West Bank and Gaza Strip.

Israel wants to block PLO participation and limit the selection of Palestinians to residents of the West Bank and Gaza.