As Prime Minister Menachem Begin ponders the pleas of political colleagues that he cancel plans to resign, American and European diplomats are already speculating whether the Mideast peace process would be helped by his departure.
Observers here believe a Labor Party government would try to move quickly to pull Israeli troops out of Lebanon, a sharp departure from Mr. Begin's policies, and would open some new possibilities for negotiations over the Palestinian question.
However, Labor's chances of forming a majority coalition are rated extremely slim. If, as appears likely, a new government is formed by the ruling Likud coalition to replace the Begin Cabinet, few changes are expected in Israeli foreign policy in the short term.
Reports from Washington indicate that the American administration at this point does not have a strong preference between the two Israeli parties but is more concerned that Israel produce a leader with whom it can work. Mr. Begin, though sometimes frustrating, was also seen as predictable and strong.
Defense Minister Moshe Arens, despite his hawkish views, has been a favorite of the Americans because of his sensitivity to United States thinking. And Labor Party leader Shimon Peres, while his policies on Lebanon and the West Bank are viewed favorably, is seen as a man who might not be strong enough to shift the Israeli course.
Insiders are saying that if Begin steps down, his coalition colleagues will be able to put together a new Likud Cabinet without going to elections. Labor still clings to the small hope that it can entice some Likud members to cross party lines and bolster the present 56 Labor seats to a bare majority of the 120 seat chamber.
The leading Likud contender to replace Begin is Foreign Minister Yitzhak Shamir. Mr. Shamir is a longtime colleague of Begin and belonged to a Jewish terrorist group that fought the British during Britain's mandate in Palestine. The group was to the right of the underground group led by Begin.
Shamir lacks political charisma. But he is a staunch defender of Begin's policies on the West Bank and in Lebanon and is considered unlikely to deviate from them. This is a point of great importance to Begin. For this reason, Shamir is seen as a likely compromise figure on whom warring Likud factions may be able to agree.
A dark horse is Deputy Prime Minister David Levy, a young man of Moroccan Jewish origins who worked his way up from poverty and has built a reputation as a populist interested in domestic social issues. Mr. Levy was one of the few Cabinet ministers who questioned aspects of the Lebanon war. Friends say he was moved by the experiences of his two soldier sons in the Lebanese conflict.
But Levy has pushed hard for additional Jewish settlements on the West Bank, and should he be chosen, would be unlikely to make major changes in foreign and military policy where he has little experience.
Two popular Likud figures, the very hawkish Minister of Defense Moshe Arens and former Defense Minister Ezer Weizman, considered by some Israelis to be a closet dove, would be ruled out of the premiership in a government shuffle because they do not currently hold seats in Israel's parliament.
A key question, however, is whether any successor to Begin's dominant political presence and overwhelming popularity can hold the shaky Likud coalition together. There is speculation that a new Likud government would have to call for early elections before the government's term of office ends in May 1985.
This would open the door to new Likud contenders for the top position and would also leave the government open to public pressure on the Lebanon issue if, as seems likely, Israel remains stuck there with continuing military casualties.
New elections also leave open the possibility of a Labor victory if public displeasure with the Lebanon war and with Israel's worsening economy continues to rise.
Israel's ambassador to the United States, Meir Rosenne, said this week that no change in Israeli foreign policy should be expected if the opposition Labor Party takes over after a Begin resignation.
But the Labor Party on Tuesday angrily rejected Ambassador Rosenne's remarks.
The Labor Party is calling for a partial pullback of Israeli troops from Lebanon to be followed by total Israeli evacuation from south and east Lebanon as soon as adequate security arrangements could be worked out with the Lebanese Army and international forces to protect Israel's northern border towns. Unlike the Begin administration, Labor would not make the pullback contingent on Syrian agreements to withdraw its troops from Lebanon.
Syria's refusal to leave Lebanon has left the Israeli Army stuck there with its imminent partial pullback to south Lebanon likely to turn into an indefinite stay.
However, no one can predict how long it would take Labor to make the security arrangements in south Lebanon, which would be the precondition to Israeli withdrawal.
The Labor Party would also like to chart a new course on negotiations over the occupied West Bank and Gaza Strip, populated by 1.3 million Palestinians.
The Labor Party called for splitting that land with King Hussein of Jordan in return for peace. But the Jordanian regime has never shown any interest in dividing the West Bank and forgoing the return of the Arab part of Jerusalem. But Labor leaders believe a more flexible Israeli position on the West Bank after the hard line of the Begin government might produce a workable Jordanian response.