By Dion Nissenbaum,Knight Ridder Newspapers

JERUSALEM – Calling it a “moment of truth” for his nation, Israeli Finance Minister Benjamin Netanyahu abruptly resigned Sunday in protest of his government’s plan to begin shutting down all Jewish settlements in the Gaza Strip next week.

An emotional Netanyahu accused Prime Minister Ariel Sharon of “ignoring reality” and said he could not in good conscience support a plan that he contends will endanger the nation’s security.

“I am not willing to be part of a process that ignores reality and blindly proceeds to establish an Islamic terror base that will threaten the entire country,” Netanyahu wrote in his resignation letter, which was to become effective after 48 hours.

While dramatic, Netanyahu’s move was unlikely to threaten Israel’s settlement shutdown plans, which still have the support of most Israelis and of Sharon’s coalition government.

The government’s cabinet reaffirmed its withdrawal plan after Netanyahu submitted his resignation, voting 17-5 to support the first stage of the plan to shutter all 21 Jewish settlements in the occupied Gaza Strip and four smaller ones in the northern West Bank.

That decision sets the stage for Israel to begin removing all 8,500 Israeli settlers from the Gaza Strip next week.

Sharon wasted no time in filling Netanyahu’s post. The prime minister named fellow Likud member Ehud Olmert, the former mayor of Jerusalem and current minister of industry and trade, as interim finance minister.

Sharon, a longtime proponent of the settler movement, calls his plan to shut the ones in Gaza down a difficult but essential step for Israel to increase its security.

It will remove some Israelis from the disputed Palestinian territories while bolstering protection for hundreds of thousands of other Jewish settlers in the West Bank.

But Netanyahu said the initiative has already proven a failure because Palestinian militants are gaining strength in the Gaza Strip and vowing to increase their armed attacks in the West Bank.

Both Israelis and Palestinians are already expressing concern that Palestinian President Mahmoud Abbas won’t be able to contain extremist groups in the Gaza Strip that are already jostling for power.

Over the past few weeks, Palestinian forces have been drawn into street battles with militants. Armed factions also have detonated two bombs outside the home and office of prominent government officials.

On Sunday, Palestinian gunmen in the West Bank opened fire on a passing car, seriously wounding a 10-year-old boy from a nearby settlement. An armed faction close to Abbas claimed the shooting was in response to last week’s bus shooting by a disgruntled Israeli army deserter opposed to the settlement shutdown who killed four Israeli Arabs. After the shooting, the 19-year-old soldier was beaten to death by an angry mob.

Netanyahu’s move was widely viewed as a way for the former prime minister to position himself to challenge Sharon after the pullout plan is completed this fall.

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