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Tue Apr 4, 5:21 AM ET
Israeli Interim Prime Minister Ehud Olmert, who hopes to set a border unilaterally with the Palestinians, plans to announce talks for a joint government with the leftist Labor Party, a political source said on Tuesday.
Olmert and Labor Party leader Amir Peretz "are going to announce a formal entry into negotiations" for a new coalition after Olmert's victory in a March 28 national election, a political source said.
A joint news conference is scheduled for later on Tuesday.
Olmert's centrist Kadima party won just 29 seats in the 120-member parliament, which means he must form a coalition with other parties in order to rule.
Peretz's Labor, which won 19 seats, is the largest and most likely partner for Kadima, which campaigned on a platform to unilaterally set Israel's borders with the Palestinians by 2010.
The launch of Kadima's talks with Labor came amid expectations that President Moshe Katsav will formally designate Olmert as the new prime minister as early as Wednesday.
Once named by Katsav, Olmert would have 42 days to form a government.
The decision to negotiate with Labor follows a secret meeting at which Olmert agreed to offer Peretz a senior cabinet post, possibly the defense ministry, the source said.
The prestigious post was offered to Peretz, a former trade unionist, in a bid to persuade him to drop a demand for the finance ministry.
Kadima fears Labor's demands for increased social spending would strain the state budget and make financial markets nervous.
(Additional reporting by Dan Williams)
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