Shamir Facing Calls to Give Up Likud Party Leadership : Israel: The erosion of his power has left him vulnerable to demands that he step down. But an aide says he has no plans to quit.

JERUSALEM —  Just as Prime Minister Yitzhak Shamir was sitting down to hear a compromise plan to save his government, a message arrived from 21 members of his own Likud Party awaiting his return to the Parliament floor.

The message was unequivocal: Accept no compromise that would open the way to talks with the Palestinians under an American-brokered formula.

With the note in hand, Shamir balked at giving his approval to peace talks, as advised by the head of a key religious party. His refusal sealed the fate of his crumbling government and showed that Likud was leading Shamir, not he Likud.

The episode during Thursday’s dramatic fall of Shamir’s government highlighted the advanced state of corrosion in his leadership as the moment for decision approached.

Shamir remains head of a caretaker government, but already Friday there was a growing chorus from within his party calling for him to step down, the culmination of a quick slide for a combative leader who had skillfully navigated the shoals of a rough coalition government and bitter rivalries within Likud.

“Shamir can never recover from this. He is on his way out,” ventured Arye Naor, a political commentator and former Likud official.

Political obituaries in Israel are often premature. Many observers were counting out Labor Party leader Shimon Peres in 1988 after he led his party to a fourth straight electoral loss; now, he is seen as having the inside track on forming a new government to replace the Shamir-led coalition.

On Friday, Peres said he expected to put together a working majority of 70 seats in Israel’s 120-member Parliament, take the reins of government and enter peace talks. Chaim Herzog, the country’s ceremonial president, is scheduled to sound out political leaders on Sunday about who is best positioned to form a new Cabinet and succeed Shamir as prime minister.

If Peres fails, Likud might get an opportunity. But would Shamir still head the party by then?

Shamir himself made no comment on his plans, but Yossi Achimeir, director of the prime minister’s office, said Shamir has no plans to step down as leader of the right-wing Likud. One newspaper said he would resign, another that he would hold on.

In any case, less than 24 hours after the Knesset, Israel’s Parliament, voted to bring down Shamir, knives were being drawn by a number of his cohorts.

“Mr. Shamir will have to resign eventually,” said Tzahi Hanegbi, a Likud member of Parliament. “When the time comes, he will have to realize he has to pass the leadership to someone else.”

Followers of David Levy, the housing minister and a Likud rival of Shamir, reportedly met late Thursday to chart strategy for a party takeover.

“David Levy has never denied he wants to be prime minister,” said Reuven Rivlin, a Likud member of the Knesset close to Levy. “The reality shows that as long as we don’t unite around one person, it will be fatal for Likud.”

The 72-year-old Shamir seems to have lost the qualities that kept him atop Likud, despite predictions to the contrary, since the 1983 retirement of Menachem Begin. In recent months, he has appeared indecisive and unable to control events he set in motion last May when he proposed a plan for elections in the West Bank and Gaza Strip.

“His was a simple failure of leadership,” remarked Yaron Ezrahi, a political theorist at Hebrew University.

Evidence of Shamir’s decline surfaced in January during a heated controversy over his attempted firing of Ezer Weizman, a Cabinet minister from the Labor Party who made direct contact with the Palestine Liberation Organization against government policy.

Shamir retracted the dismissal under pressure from Labor partners in the coalition government and as a result, came in for sharp criticism from hard-liners within Likud.

Last month, Shamir tried to win a mandate from the Likud central committee to move toward American-designed peace talks. The meeting ended in a raucous shouting match with party rival Ariel Sharon who, in the chaos, thwarted Shamir from gaining clear-cut support.

Finally, even key Shamir loyalists began to raise questions about the wisdom of Secretary of State James A. Baker III’s plan for initial talks--talks that would include Palestinians from abroad and from East Jerusalem, as well as residents of the occupied West Bank and Gaza Strip.

“Shamir had all but lost his maneuverability,” said a Foreign Ministry official from Shamir’s party.

Two events further weakened him, observers say.

In late February, Labor set a two-week deadline for Shamir to accept Baker’s formula, threatening to topple the government if he didn’t comply. Shamir was being asked to show his hand at a time when his hold on Likud was already slipping.

The pressure created by the Labor threat was increased by the intervention of the Bush Administration. First, Secretary of State Baker told Congress that indecision in Israel was holding up progress on his plan; Egypt, which would be a participant in the talks, had already replied positively. Baker added that the Administration would withhold $400 million in American-backed housing loans for Soviet immigrants to Israel unless the Shamir government halted new settlements in the West Bank and Gaza.

Baker’s comments were followed quickly by President Bush’s call for Israel to stop settling civilians not only in the West Bank but also in East Jerusalem, the sector of the city that Israel seized from Jordan during the 1967 Middle East War. Israel considers all of Jerusalem to be under its perpetual sovereignty, while the United States maintains that the eventual status of Jerusalem should be decided by negotiations.

Bush’s March 3 statement came on the day that Shamir met with Likud followers to plan a response to Baker’s proposals. Two days later, according to Israeli press reports, Shamir concluded that Washington could not be trusted and that his peace proposal had reached a dead end.

Now Shamir faces challenges by ambitious rivals who for months had warned against embarking on peace talks. Levy, the Moroccan-born housing minister, bills himself as a new-generation leader. Sharon, having resigned from Shamir’s Cabinet, is campaigning among the Likud rank and file to unseat the prime minister.

NEXT STEP

Israeli President Chaim Herzog is to begin formal consultations with party leaders Sunday as the first step toward organizing a new Cabinet. Herzog must designate a party leader to try to form a coalition, because no party is strong enough to rule by itself. It is generally thought that he will designate Labor Party leader Shimon Peres, who was chief architect of the 60-55 no-confidence vote against the Likud Party government and who has courted the religious parties, which will play a key role. There are 15 political parties in the Knesset.