Barak may pay £15m to break coalition deadlock deadline

After more than 30 hours of negotiations, there was still no solution yesterday to the impasse between Ehud Barak and the ultra-religious Shas party.

After more than 30 hours of negotiations, there was still no solution yesterday to the impasse between Ehud Barak and the ultra-religious Shas party.

Shas has threatened to leave the Israeli Prime Minister's coalition, wiping out his parliamentary majority at a delicate point in the Middle East peace process. But the signs pointed to a compromise in which Mr Barak will agree to allocate more than 100 million Shekels - £15m - to the party's bankrupt school system, meeting one of its central demands.

Capitulation by Mr Barak will be regarded by many secular Israelis as tantamount to giving into blackmail from a party which is intensely intolerant, anachronistic and mired in scandal. In April, its leader Aryeh Deri was jailed for four years for bribery and corruption, and several other leaders have tangled with the law - including the head of the schools system, who faces allegations of financial mismanagement.

But, though his government would survive without Shas - its largest coalition partner - Mr Barak needs to keep the party on side if he is to win a referendum on the return of the Golan Heights to Syria, if the peace talks progress to that point. Analysts say Shas, too, would lose much - not least its ability to extract more large sums from the government.