Israeli parties said to agree on new government, just ahead of Obama trip

JERUSALEM After weeks of deadlock, Israeli Prime Minister Benjamin Netanyahu on Thursday reached an agreement with coalition partners to form the country's next government, said a spokeswoman for a party involved in the talks.

The new Cabinet appears set to address pressing domestic issues while putting peacemaking with the Palestinians on the back burner.

The three main coalition partners struck a deal after weeks of tough negotiations and were to sign the agreement later Thursday, a spokeswoman for the Yesh Atid party told The Associated Press. She spoke on condition of anonymity pending a formal announcement.

Reuters quotes a spokeswoman for Netanyahu's right-wing Likud party, Noga Katz, as saying a deal has been struck. "There is a government," she told Reuters.

If all goes according to plan, the new Israeli government would be sworn by Monday next week, two days before President Obama visits Israel.

Talks had stalled over several thorny issues, including the division of key Cabinet portfolios and plans to reform the country's military draft.

Although Netanyahu' Likud-Yisrael Beitenu bloc emerged as the biggest faction in the Jan. 22 parliamentary election with 31 seats, he has struggled to form a coalition with the necessary 61-seat majority of 120 seats in parliament.

The prime minister's bloc has now joined up with two parties led by charismatic newcomers who made big gains in the election.

Yesh Atid, founded by former TV personality Yair Lapid, won 19 seats in the election on a message promising relief to Israel's struggling middle class and an end to draft exemptions for the ultra-Orthodox.

As head of the second largest party in parliament, Lapid will serve as the new finance minister, a position with great influence over setting the government's budget. It will also control the Education Ministry.

The Jewish Home, a party linked to the West Bank settler movement led by high-tech millionaire Naftali Bennett, will likely control the Housing and Trade ministries.

Netanyahu's bloc will retain control of the powerful defense and interior ministries.

Former Foreign Minister Tzipi Livni, who leads a small dovish party committed to reaching peace with the Palestinians, joined Netanyahu's coalition last month with promises that she would be his chief peace negotiator with the Palestinians.

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