But elections must now take place as soon as possible. There is a debate over whether to hold them in February or March. February is preferable, since the sooner they are held, the more the country saves and the less precious diplomatic time wasted. If in the United Kingdom the prime minister can dissolve parliament and declare new elections within three weeks, there is no reason not to do the same in Israel within three months.

The less time the government has, the harder it will be to implement election economics and the smaller the chance the budget framework will be breached. In any case there is no likelihood that the state budget will be passed before the elections, and it is clear that the important reforms - the splitting of the Electric Corporation, the splitting of Mekorot Water Company, the splitting of the Oil Refineries and the privatization of Israel Military Industries, a comprehensive reform of the Israel Lands Authority and the Israel Airports Authority - will be postponed until after the elections.

Whether Ariel Sharon stays in the Likud or establishes a new party, it is clear that the main battle will be between him and Peretz. The outcome will be determined by the choice of battlefield. Peretz will work to make it a socioeconomic one; Sharon will try to make it diplomatic and military. At the same time, Sharon will continue to take pride in the achievements of the economy, the high growth rate and the lowering of unemployment, and to urge the Finance Ministry to submit to him by the end of the month a comprehensive plan to fight poverty.

The more Peretz aims his rhetoric at the war on poverty, the more Sharon will try to circle around to the left, to prove that there is no need to change the government in order to help the poor.

Poverty can be fought in two ways: by populism or in ways that suit reality. Populism would mean backtracking on cuts in benefits and guaranteed income payments, increasing child allowances and other ways of encouraging life at the expense of the state and the non-work culture. Reality requires roads that are harder and longer, which come down mainly to encouragement to join the work force. That is possible through job training, adult education, expanding the Wisconsin welfare-to-work project, subsidizing child care and transportation to work, investing in education, requiring a core curriculum in ultra-Orthodox schools and continuing to reduce the number of foreign workers. Benefits should also be increased for those who are not part of the work force - the elderly, the disabled and the sick.

If Sharon and Ehud Olmert fall into the populist trap, they might end up killing off economic growth, undermining stability, creating a financial crisis, increasing unemployment and, in the final analysis, increasing poverty.