Israeli Prime Minister-designate Benjamin Netanyahu’s Likud party signed a coalition deal with ultra-Orthodox party Shas party early on Monday, party officials said, bringing the right-wing leader closer to assuming the premiership.

Shas lined up alongside Yisrael Beitenu as partners in Netanyahu’s fledgling coalition after securing a deal earlier this month.

"Israel is set to face many challenges, both social and economic and on the diplomatic and security front, as a result it is only right to combine forces and form a broad government," Shas leader Eli Yishai told journalists after the deal was signed.

Likud legislator Gideon Saar, a member of Netanyahu’s negotiating team, said the party would strive to broaden the coalition further in the coming days.

"Now we have 53 lawmakers tied into coalition agreements headed by Benjamin Netanyahu and in the coming days we will work to broaden the parliamentary base for support for his government," Saar said.
 
Deadline to Form a Coalition

Netanyahu, who served as prime minister from 1996 to 1999, faces an April 3 deadline to complete the formation of a government after being given the task last month by President Shimon Peres.

As a next stage, Netanyahu is trying to recruit the center-left Labour party, which will conditionally open coalition talks later on Monday.

Labour leader Ehud Barak, the outgoing defense minister and a former prime minister and military chief, said he would ask his party’s executive for a mandate to join Netanyahu’s government when it meets on Tuesday.

Barak issued a statement late on Sunday saying he had appointed three allies to negotiate on Labour’s behalf.

He faces strong opposition from party rivals who say joining the government would sound the death knell for Labour, once the dominant force in Israeli politics and now, with 13 seats, the fourth-largest party in the Knesset.

Likud won 27 seats and the centrist Kadima of outgoing Foreign Minister Tzipi Livni polled 28, while Yisrael Beitenu won 15 and Shas had 11.
 
Collision Course with Obama

If Labour refuses to join, Netanyahu could be left with the option of forming a narrow right-wing coalition and giving a prominent role to Yisrael Beitenu’s leader, Avigdor Lieberman as foreign minister.

This could put Netanyahu on a collision course with the administration of U.S. President Barack Obama who has pledged to pursue an Israeli-Palestinian peace deal.

Yisrael Beitenu wants to trade land where Israeli-Arab citizens live in exchange for Jewish settlements in the West Bank in any peace deal with Palestinians.

Lieberman called for all Israelis to take an oath of loyalty to the Jewish state as a condition for citizenship.

Netanyahu’s efforts to court Kadima appeared to have ended unsuccessfully.

Livni has demanded Netanyahu commit to U.S.-backed talks with Palestinians for a two-state solution as a condition for joining a government. She also wanted a power-sharing arrangement, a call rejected by Netanyahu.

Netanyahu, who clashed with former U.S. President Bill Clinton over Middle East policies when he was last prime minister, said he wants to shift the focus of Palestinian statehood talks from territorial to economic issues, an idea rejected by the Palestinians.

(Alarabiya.net and Agencies)