JERUSALEM — A hawkish faction in Prime Minister Ehud Olmert's coalition pulled out of the government on Wednesday, weakening him at a time when he needs broad support to reach a peace deal with the Palestinians by the end of the year.
The withdrawal of Yisrael Beiteinu's 11 lawmakers from the government leaves Olmert with a narrower majority of 67 in the 120-seat parliament.
"Negotiations on the basis of land for peace is a fatal mistake," Avigdor Lieberman, head of the faction, told a news conference.
After Lieberman's announcement, Olmert's office released a statement saying the prime minister was determined to pursue peacemaking.
"There is no substitute for serious negotiations with a goal of achieving peace," the statement said. "That is the order of the hour."
Olmert brought Lieberman into his coalition in October 2006 to prop up his government, badly weakened by the just-concluded Lebanon war. Israel's peace camp criticized Olmert for swinging his government lineup to the right, and accused him of seeking a pretext to avoid concessions to the Palestinians. On Wednesday, they welcomed Lieberman's departure.
"Today, I think that Olmert is in a better position to proceed with the peace process," said Yossi Beilin of the dovish Meretz party. "My hope is that now the way will be clear and there will be no excuses to proceed with an agreement in 2008."
Lieberman's decision came just days after Palestinian and Israeli negotiators began tackling the core issues of their conflict _ final borders, sovereignty over disputed Jerusalem, and the fate of Palestinian refugees who lost homes in Israel during the war that broke out following the Jewish state's creation in 1948.
He had repeatedly threatened to leave the government if these issues were broached.
"If we pull back to the 1967 borders, everyone should ask himself, what will happen the following day," Lieberman said. "Will the conflict stop, will the terror stop? Nothing will change."
In a small step to remove a major obstacle to peace talks with Palestinians, Israeli forces evacuated two makeshift settlement outposts in the West Bank on Wednesday. Israel promised under a 2003 peace plan to evacuate about two dozen outposts. As part of the renewal of Israeli-Palestinian peace talks, President Bush pressed Israel last week to fulfill its commitment.
Political motivations might have also played a role in Lieberman's move: Sitting in a peacemaking coalition could undermine any ambitions he might have to position himself as leader of Israel's rightwing opposition.
At his news conference, however, he denied any interest in supplanting former Prime Minister Benjamin Netanyahu as leader of the rightwing camp.
The ultra-Orthodox Shas Party with 12 lawmakers has also threatened to leave if Israel agrees to any compromise over Jerusalem, whose eastern sector Israel captured in the 1967 Mideast war. Palestinians claim east Jerusalem as the capital of a future state.
Israelis and Palestinians relaunched talks after seven years of violence at a U.S.-sponsored Mideast conference in November. The leaders pledged to try to reach an agreement before Bush leaves office a year from now.
Olmert had tried to persuade Lieberman to stay in the government in a meeting with him on Tuesday. But Yisrael Beiteinu decided in a meeting Wednesday to leave, Lieberman said.
"Nothing will come of these negotiations," he declared.
The Moldova-born Lieberman, whose party garners much of its support from immigrants from the former Soviet Union, is known for blunt threats such as his November suggestion that Hamas leaders be sent to "paradise."
His party supports a two-state solution _ but controversially, one based on an exchange of territory and population that would see as few Arabs as possible left inside Israel and many Israeli settlers remaining under Israeli sovereignty.
Arab citizens make up about one-fifth of Israel's population of 7 million.
Lieberman devoted much of his news conference to a blistering attack on Israel's Arab citizens.
Israeli Arab leaders are "working systematically to destroy Israel as a Jewish and Zionist state," he said.
Arab lawmaker Ahmad Tibi reacted by calling him "a racist."
"Lieberman is a fascist immigrant who is willing to kick all Arabs and Arab leaders from this country," Tibi said.