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DATE=5/17/99 TYPE=CORRESPONDENT REPORT NUMBER=2-249483 TITLE=ISRAEL POL (L-2ND UPDATE) BYLINE=DAVID GOLLUST DATELINE=JERUSALEM CONTENT= VOICED AT: INTRO: IN ISRAEL, LABOR PARTY LEADER EHUD BARAK APPEARS HEADED FOR A DECISIVE ELECTION VICTORY OVER INCUMBENT PRIME MINISTER BENJAMIN NETNAYAHU. MR. NETANYAHU HAS CONCEDED DEFEAT AND SAYS HE WILL STEP DOWN AS HEAD OF THE RIGHT-WING LIKUD PARTY. V-O-A'S DAVID GOLLUST REPORTS FROM JERUSALEM. TEXT: MR. BARAK HAD LED IN THE FINAL PRE-ELECTION OPINION POLLS, BUT PROJECTIONS BY ISRAEL'S TWO TELEVISION NETWORKS, BASED ON EXIT INTERVIEWS WITH VOTERS, INDICATE AN EVEN BIGGER VICTORY MARGIN FOR THE LABOR PARTY LEADER. ISRAEL'S CHANNEL-ONE STATE TELEVISION PROJECTED MR. BARAK WINNING 58-POINT-FIVE PERCENT OF THE VOTE IN THE TWO-MAN RACE, WHILE THE PRIVATE CHANNEL-TWO SAID HE WOULD WIN WITH 57 PERCENT. THOUGH HE HAD TALKED OF AN UPSET VICTORY, MR. NETANYAHU CONCEDED DEFEAT WITHIN A HALF HOUR OF THE POLLS' CLOSE. HE SHOCKED HIS SUPPORTERS IN TEL AVIV BY ALSO ANNOUNCING HIS RESIGNATION AS LEADER OF THE LIKUD PARTY: /// NETANYAHU ACT IN HEBREW, FADING TO CORRESPONDENT /// MR. NETANYAHU SAID HE HAD A LOT TO GIVE TO ISRAEL, BUT THAT IT WAS TIME TO TAKE A BREAK WITH HIS FAMILY AND TO RECONSIDER HIS FUTURE IN POLITICS. MR. NETANYAHU WILL STAY ON AS PRIME MINISTER IN A CARETAKER CAPACITY, UNTIL MR. BARAK CAN FORM HIS NEW GOVERNMENT. THE LABOR PARTY LEADER WILL HAVE 45 DAYS TO DO SO, BUT IT DOES NOT APPEAR HE WILL HAVE MUCH DIFFICULTY IN ASSEMBLING A LEFT-CENTER COALITION, GIVEN PROJECTIONS ON THE MAKEUP OF THE NEXT KNESSET. THE CHANNEL-ONE EXIT POLL SAID LABOR WOULD REMAIN THE BIGGEST SINGLE PARTY, WITH 33 SEATS, WHILE THE LIKUD WOULD SLUMP TO JUST 18 SEATS, ITS POOREST SHOWING SINCE 1961. ISRAELI POLITICAL ANALYSTS SAY MR. NETANYAHU'S DECISION TO QUIT THE PARTY LEADERSHIP IS NOT SURPRISING IN THAT REGARD, SINCE WITH LIKUD FARING SO BADLY, HE PROBABLY WOULD HAVE BEEN OUSTED FROM THE JOB. TURNOUT IN THE ELECTION IS EXPECTED TO HAVE BEEN ABOUT 80 PERCENT OF THE ISRAELI ELECTORATE -- VOTERS ENERGIZED BY A BITTER CAMPAIGN THAT FOSCUSED MORE ON PERSONALITIES AND NAME-CALLING THAN POLITICAL ISSUES INCLUDING THE PEACE PROCESS WITH THE PALESTINIANS. MR. BARAK HAS SAID HE WANTS TO RESTORE TRUST AND MOMENTUM TO THE PEACE PROCESS, WHICH ESSENTIALLY CAME TO A HALT LATE LAST YEAR WHEN MR. NETANYAHU'S RIGHT-WING COALITION FELL APART OVER TROOP PULLBACKS IN THE WEST BANK UNDER THE U-S BROKERED WYE RIVER AGREEMENT. (SIGNED) NEB/DAG/WTW 17-May-99 4:49 PM EDT (2049 UTC) NNNN Source: Voice of America .