However, the Labor-Kadima alliance only fields 48 seats in the 120 member Knesset. Eyes have now turned to the ultra-Orthodox party Shas and its 12 MKs to form the third pillar of the coalition. Without Shas, Livni would be left trying to scrape together a coalition from a number of smaller parties such as Gil, the pensioners’ party, and Meretz, a partyto the left of Labor. A coalition without Shas, if at all possible, is likely to result in an unstable, short-lived government. More likely, early elections wouldbe the outcome, something which both Barak and Livni have cause to fear -- polls suggest that Binyamin Netanyahu’s Likud Party would be the clear winner.

Shas, fully aware of the strength of its position, has set a high price for joining the coalition, stating that concessions on Jerusalem in Israeli-Palestinian negotiations are unacceptable. Given the parlous state of the peace talks, this condition may be the easiest to fulfil; any near-term progress is likely to come in piecemeal withdrawals rather than a grand final-status deal. More troublesome are Shas’ demands on the budget. Shas is demanding an increase of over 250 million dollars in the budget for child support payments, which disproportionately benefit Shas’ Haredi constituency and their traditionally large families.

The fiscal strain of adding Shas to the governing coalition during an economic downturn is substantial. However, faced with the prospect of early elections that could well see the Kadima Party evaporate in the absence of its creator Ariel Sharon, Livni may have no choice but to cave in to Shas’ demands.