Netanyahu throws down leadership challenge

Mr Netanyahu, who resigned as finance minister three weeks ago in protest at the disengagement, has set in motion the first party leadership challenge to a sitting Prime Minister.

At the outset of what could also prove to be one of the most bitter and personalised contests within an Israeli party, Mr Netanyahu pledged "to rehabilitate the ruins" after what he claimed had been Mr Sharon's abandonment of "Likud principles".

Mr Netanyahu, prime minister for a turbulent period from 1996 to 1999, was flanked by parliamentary supporters including the former Soviet dissident and Israeli cabinet minister Nathan Sharansky as he launched an unashamed appeal to far-right Likud critics of Mr Sharon.

He said: "Today, the Likud and the state need a leader who will stop granting a tailwind to terrorism, who will stop the spreading of criminal corruption, and who will heal the rifts and abysses which opened in the people."

His campaign has been boosted by a series of opinion polls showing that he outstrips Mr Sharon among the registered membership of the party who choose the leader in pre-election primaries. But with recent polls saying that Mr Sharon - like disengagement itself - is significantly more popular than his rival or his policies, some of the Prime Minister's aides have been urging him to walk out of Likud and form a new group.

One of Mr Sharon's most senior aides said yesterday that the Prime Minister was "studying the situation" and that "no decision has been taken" on his ultimate strategy. The aide added: "Obviously his preference would be to stay in Likud, which is home," but also said that he would be considering his plans over the coming days.

The crisis for Mr Sharon has been made more urgent by the decision of an internal party tribunal not to block an attempt to hold a special September meeting of the 3,000-strong, hard-right dominated Likud Central Committee with a view to rushing forward primary elections to as early as November. Mr Netanyahu called on Mr Sharon to stay in Likud if he lost the vote.

If the threat of a Netanyahu premiership prompts Labour to leave Mr Sharon's governing coalition, that could in turn bring forward a general election that is currently scheduled for November 2006.

Yesterday, Mr Netanyahu implicitly acknowledged the many criticisms of his own premiership, in which he presided over the collapse of the Oslo accords - which he had opposed - by declaring: "I offer my candidacy not only on the experience of the past. The test of every person and every leader is the ability to develop, to mature, and to learn from the mistakes of the past." But he added: "We have to restore to the Likud and the state the principles that Sharon trampled on."

Mr Netanyahu did not say explicitly what he meant, but the Likud constitution theoretically commits it to a greater Israel covering the whole of historic Palestine. In a counter appeal to the right, his opponents are likely to recall that he was accused of compromising such principles when he ceded much of Hebron to the Palestinians in 1997, and when he was the only Likud Prime Minister to shake hands with Yasser Arafat. Meanwhile, most of the 85 families in the southern West Bank settlement of Teneh Omarim, on the Palestinian side of the Israeli army security barrier, are pressing for it to be evacuated on the same compensation terms afforded to the settlers who were withdrawn from Gaza this month.

The move poses the question of whether other settlements on the Palestinian side of the barrier - which has provoked bitter controversy because of its routing in many places well to the east of the pre-1967 border - could gradually be vacated, underpinning the barrier as a new de facto border. The government denied there was any strategic plan for this to happen.