NOW that Israel's Labor Party leader Shimon Peres has admitted defeat in trying to form a government, it is caretaker Prime Minister Yitzhak Shamir's turn to play the coalition-building game. Mr. Peres, who helped bring down Mr. Shamir's government last month, notified President Chaim Herzog Thursday that he could not enlist a 61st member of the 120-member parliament to break the deadlock and form a government. President Herzog has given Shamir, the leader of Israel's rightist Likud Party, a chance to build another coalition.
Shamir, whose Likud has formed coalitions with Labor since 1984, has two basic choices.
He can put together a narrow, rightist government with the help of some of the right-wing rabbis who foiled Peres's bid for leadership. Such a government would enlist the support of smaller ultranationalist parties that demand expanded settlement in the Israeli-occupied West Bank and Gaza Strip, and, like Shamir, oppose territorial concessions to the Arabs.
Or he can again turn to Labor to try another right-left coalition. Yitzhak Rabin, the No. 2 man in Labor, says his party should find a way back into the government.
The Labor leaders had demanded that the prime minister accept a United States proposal for negotiations with the Palestinians.