Netanyahu quits over Israeli pullout

JERUSALEM -- Finance Minister Benjamin Netanyahu, one of the highest-ranking figures in Israel's government, quit yesterday to protest next week's planned withdrawal from the Gaza Strip and, sometime afterward, from parts of the West Bank, saying it would create an ''Islamic base" on Israel's doorstep.

Netanyahu tendered his resignation toward the end of a dramatic meeting of Prime Minister Ariel Sharon's Cabinet in which ministers, by a vote of 17 to 5, gave troops the green light to begin on Aug. 17 dismantling three of the 25 settlements slated for evacuation. Further evacuations will also be preceded by Cabinet voting.

The resignation gave a last-minute boost to Jewish settlers trying to prevent the pullout, even as it sent markets reeling. Settler leaders predicted that other ministers would quit the Cabinet, forcing Sharon to call an early election.

But analysts said the Israeli leader was still firmly in control and would carry out the withdrawal on time.

''I'm not willing to be a party to a step that endangers our security, divides the nation, and reinforces the principle of withdrawing to the 1967 lines," Netanyahu, who is Sharon's main rival in the ruling Likud party, said during a news conference in Jerusalem hours after quitting. He said he had been ''torn inside" for months but decided he did not want to go down in history as an accomplice to the unilateral withdrawal. ''A leader must ask himself . . . 'What do you represent?' " he said.

Sharon quickly named Ehud Olmert, a political confidant, as acting finance minister and said the government's economic policies would not change.

Netanyahu, a former prime minister, had stepped up his criticism of the withdrawal in recent weeks. Though he raised his hand in favor of the plan in a Cabinet meeting last year, he has abstained or opposed it in several recent votes.

During the news conference, Netanyahu said he put off his resignation until yesterday to complete what he called ''historic reforms" in the economy. But analysts said his timing had more to do with party politics.

The 55-year-old Netanyahu is expected to compete against Sharon, 77, for leadership of Likud before the next election, which is scheduled for late next year but could be held sooner.

Since Sharon has alienated many right-wing supporters with the withdrawal plan, Netanyahu was trying to position himself as the true candidate of the nationalist camp.

''It's largely political," said political scientist Shmuel Sandler, referring to Netanyahu's motive for leaving the government. ''If the withdrawal turns into a big mess, Netanyahu has a chance. If not, he'll look like the bad guy.

''Ministers who resign don't usually do well in Israel," said Sandler, of the BESA Center for Strategic Studies at Bar-Ilan University near Tel Aviv.

He said Netanyahu's move was ''too little, too late" to impede the evacuation of 21 settlements in Gaza and four more in the northern West Bank.

Settlers have organized huge demonstrations against the withdrawal in recent weeks, but their campaign has suffered from the absence of a national leader of Netanyahu's stature.

The main settler movement, known by its acronym YESHA, welcomed his resignation yesterday.

''We expect to see a chain reaction, with other ministers resigning, that will make clear to everyone that this government has no legitimacy," said Hilik Navon, a spokesman for YESHA. ''At the very least, it should delay the disengagement."

While criticizing mainly the unilateral nature of the withdrawal and the fact that Israel is getting nothing in return from the Palestinians, Netanyahu gave no indication that he intends to lead the settler campaign. In fact, he conceded that the battle waged by government opponents is all but lost.

''I don't anticipate that my resignation from the government will stop the unilateral disengagement," he said.

Sharon has said that severing Israel from Gaza, where about 8,000 settlers live among 1.3 million Palestinians, will ease Israel's security burden and help Jews maintain their long-term majority. Many settlers believe that the area, which Israel captured in the 1967 war, was promised to Jews by God and should never be ceded.

Most settlers are expected to defy orders to leave by next week, setting the stage for thousands of Israeli troops to evict them by force.

In the hour that the Tel Aviv stock market remained open after Netanyahu's announcement, Israel's blue chip index plunged, down 5.2 percent at closing. Analysts said the drop reflected the business sector's approval of Netanyahu's policies over the past 2 1/2 years and the concern that a new finance minister would chart a different course.