Meir remains in power as head of…

Meir remains in power as head of a caretaker government until a new one is formed in June, when the Labor Party manages to win a narrow election victory by selecting Rabin to lead its list.

The first native-born Israeli to become prime minister, Rabin predicts a period of "seven lean years" until the West, including the United States, will end its heavy dependence on Arab oil.

He argues that Israel therefore needs to trade space for time, to coordinate closely with Washington, and to encourage Egypt's new pro-American policy.

Dayan, who has administered the territories occupied by Israel since 1967, had gained increasing influence over Israel's conduct of foreign affairs in the early 1970s, but after the Yom Kippur War, he had been pilloried for the country's lack of preparedness.

Rabin drops Dayan from his Cabinet and appoints Peres defense minister.