Jerusalem ? A reluctant Ariel Sharon on Tuesday called early elections for Jan. 28 after the breakup of his fractious coalition, sending Israel into a tempestuous campaign that threatens further instability in the Mideast at a time of a possible confrontation with Iraq.

The surprise move also brought Sharon’s archrival for Likud leadership, Benjamin Netanyahu, back into government as temporary foreign minister. Netanyahu, who calls for the expulsion of Palestinian leader Yasser Arafat, said he will challenge Sharon for the party leadership in a primary to be held within weeks.

The winner of that struggle will face the Labor Party leader in the general election. One of the issues on the table then will be how to approach the Palestinians, whether to emphasize negotiation or war and whether to expel Arafat.

The dramatic developments underscored the growing political volatility in Israel, which has had five prime ministers in seven years. Sharon’s coalition lasted only 20 months, despite his aim to hang on until next October, the originally scheduled election date.

Sharon flip-flopped over 24 hours, saying Monday it would be irresponsible to hold early elections, and announcing Tuesday he was dissolving parliament because he was unable to set up a stable coalition after the departure of the moderate Labor Party.

Sharon accused Labor of “political caprice” by bolting over Sharon’s refusal to cut funding to Jewish settlements in the West Bank and Gaza Strip.

Palestinian reaction was muted. “We hope the Israeli people will elect a government that can deliver peace,” said Cabinet minister Saeb Ereket.

The elections could well be influenced by the Palestinian militant groups Hamas and Islamic Jihad, which boasted Tuesday their bombing and shooting attacks on Israelis led to Sharon’s downfall.

In the past, suicide bombing campaigns by Palestinian militants strenghtened Israel’s hawkish right. Both Hamas and Islamic Jihad vowed to continue such attacks during the race.