Jerusalem (CNSNews.com) - Israeli Prime Minister Ehud Barak's government, on the verge of a collapse which could have seriously jeopardized critical negotiations with the Palestinians, looks close to being salvaged Thursday.
Ministers in his second largest coalition faction, who threatened to resign over a number of domestic concerns, acknowledged that talks to resolve the dispute had led to a successful resolution on most points.
The announcement by the ultra-Orthodox Shas party came just hours before the resignations were to go into effect.
Should Shas stay in the coalition, Barak's 68-52 parliamentary majority will be restored, giving him the backing he needs during negotiations with the PA on tough "final status" issues in the months ahead.
Coalition crises are common in Israel, but the timing of the current one - three months before the September deadline for a final peace agreement - was especially significant.
In order to save the Barak government and a peace process it backs to the hilt, Shas' arch-rival in the government, the liberal Meretz party, agreed late Wednesday to withdraw its three ministers from the cabinet.
Meretz will continue to back Barak but - for now - will not have ministers in the government. Barak may, however, ask Meretz, too, to withdraw the resignations before they take effect.
"We didn't spend 25 years struggling for peace in order to be absent when the decision is ripe and ready to be taken," Meretz party leader Yossi Sarid said in a radio interview.
For many Israelis, Meretz and other leftist groups have been too willing to abandon Israel's rights and interests and make far-reaching concessions to the Palestinians in the hopes this would lead to peace.
Religious Jews also reject Meretz' humanistic philosophy, and object to the fact that Sarid, who serves as education minister, is responsible for their children's schooling.
Shas maintains its own religious private school system, for which it needed more funding. Sarid refused to earmark the funds unless his ministry could oversee their allocation. This was the main element of the dispute which saw Shas threaten to withdraw.
"The minute Sarid resigned, the way was paved for us to return to the coalition," Shas leader Eli Yishai was quoted as saying.
Shas spiritual leader, Rabbi Ovadia Yosef, made the decision 10 days ago for the party to quit the coalition. He told the ministers that they should stay in the government if Meretz quit.
Shas spokesman Itzik Suderi said that by Thursday morning, the central conflict had apparently been solved. The only remaining issue centered around Shas' demands to be more deeply involved in decisions relating to negotiations with the Arabs.
Barak's coalition crises may not be at an end. The small National Religious Party, which is supported by many Jewish residents of disputed territories, has said that the moment Barak transfers two Jerusalem suburbs to full PA control - a move already been approved by the Knesset - their five-member faction will leave the coalition.
Another of Barak's coalition partners, the immigrants' Israel B'Aliyah party, has also threatened to leave the coalition if Barak agrees to give away too much land, too soon, to the PA.
Although Shas' dispute centered on its domestic concerns, even its supporters may balk at the kind of wide-ranging concessions Barak is reportedly willing to make in order to reach an agreement with the PA.
Washington's special Middle East envoy to the Israeli-PA talks, Dennis Ross is due to meet with the heads of the negotiating teams on Thursday. Next week Secretary of State Madeleine Albright will visit the region in order to determine if the sides are ready for a three-way summit.
According to the State Department, the goal of such a summit would be "to reach a permanent status agreement." The meeting has been billed as a "Camp-David" style summit.
In 1978, then U.S. president Jimmy Carter presided over a nearly two-week summit at the presidential retreat at Camp David, Maryland between Prime Minister Menachem Begin and Egyptian President Anwar Sadat. The meeting led to the Camp David Accords and the 1979 Israel-Egypt Peace Treaty.
Time is running out for President Clinton to host such a summit and broker such an agreement.
By the end of the summer the two sides will arrive at their agreed deadline for signing an understanding. But they are still far apart on the main issues intended for resolution by then - Jerusalem, Palestinian refugees, Jewish settlements in the disputed areas known to Israelis as Judea and Samaria, and final borders.