As you walk in the Geula neighbour-hood of Jerusalem, you slip from modern Israel into another society, one far older and more steeped in tradition than the rest of the country. Some of the men are wearing long black coats and black hats, a look that goes back to 17th century Eastern Europe. A woman talks on a mobile phone in Yiddish, the German-based vernacular that was the language of most European Jews until the Holocaust. And even some men who are not religious but work in the area wear the traditional skullcap, apparently to blend in with the surroundings. Segregation of the sexes extends to shopping. 'Because of repeated requests from our customers and in order to preserve modesty, we ask men to wait for their wives outside the store,' reads a sign on the door of a woman's clothing shop. Inside Rabbi Yitzhak Goldknopf's spacious office it is Sabbath observance that is at issue. Since March the office has served as the command centre of an economic holy war over just how Jewish a state Israel should be and how much power haredim, or ultra-orthodox Jews, will wield. And no one disputes that their clout has grown in recent years - at times, such as now, they become Israel's kingmakers. The ultra-orthodox Shas party, with 12 seats in the Knesset, was seen as holding the key to whether Tzipi Livni, Ehud Olmert's replacement as head of the Kadima party, could cobble together a coalition and become prime minister or whether there would be early elections. On Friday, Shas announced it would not join a Livni-led government and yesterday she said she would recommend early parliamentary elections. Ms Livni's main rival for power, Benjamin Netanyahu, head of the right-wing Likud party, is vigorously courting ultra-orthodox leaders in a bid to block a new Kadima-led government. But Ms Livni gained momentum in her bid to form a coalition when the centre-left Labor party agreed to join forces with Kadima. Rabbi Goldknopf, stocky and with a thick white beard, wears very white, very clean ritual strings dropping from his waist as a reminder to follow the 613 divine commandments incumbent upon religious Jews. On his bookshelf are sacred texts that comprise part of Judaism's legal canon. Offering his guest something to drink, Rabbi Goldknopf, director of a national network of ultra-orthodox kindergartens, at first comes across as a quiet grandfatherly figure. But when mention is made of David Wiessman, the Israeli businessman who owns a chain of 24/7 supermarkets, AM:PM, the vast majority of which are open on the Sabbath, his voice rises. 'This Jew is spitting in our face and trampling on our values,' says Rabbi Goldknopf, head of the nine-member Committee to Safeguard the Sanctity of the Sabbath. The rabbi says he is not trying to impose on secular Israeli society as a whole that it must not sell or buy on Saturday. The causus belli in Mr Wiessman's case is that while his AM:PM stores violate the Sabbath, he sells during the rest of the week to the haredim through another chain, Shefa Shuk (Plenty Market), which gears itself towards the ultra-orthodox. 'If you want our business, don't desecrate the Sabbath,' Rabbi Goldknopf says. In a display of growing assertiveness, Rabbi Goldknopf's committee called on the observant to stay away from Shefa Shuk. Eight of its 40 branches are in ultra-orthodox areas of Israel. Since AM: PM is based in mostly secular Tel Aviv, the battle is also seen as a conflict between the freewheeling ethos of the century-old coastal city and the heavier, more religious spirit emanating from the ultra-orthodox in Jerusalem. There are 18 haredi members of the Knesset, or parliament, out of a total of 120. In political terms the haredim always wielded greater clout than their numbers because they were able to play off the right and left wing parties against each other, making themselves indispensable to any coalition. And although not themselves Zionist, or Jewish nationalist, the haredim carried a certain symbolic resonance because the secular Zionists who founded Israel drew on the symbols of the Jewish religion to construct their ideology and make their claim to the land. From its inception, the Israeli state deferred to religious sensibilities in the public sphere, keeping government offices closed on the Sabbath and observing dietary laws in the army. Matters of personal status such as marriage, divorce and burial were also left under the control of the religious establishment, prompting growing resentment in recent years. Mixing, rather than separation, of church and state has always been the norm in Israel. The ultra-orthodox have been able to translate their political clout into government funding for schools and other institutions vital for their communities - and to gain indefinite deferments of the three years of military service mandatory for most Israelis. In recent years the haredim have increasingly realised their economic clout. In 2006, Rabbi Goldknopf and other religious leaders threatened a boycott of El Al Airlines because it allowed planes to take off on the Sabbath. El Al buckled, pledging in writing not to fly on the biblical day of rest. The sanctions against Shefa Shuk are seen as a potent weapon because the rabbis can make the boycott stick. 'In modern society most people live as individuals but the haredim live as a closed community,' says Menachem Friedman, a sociologist at Bar-Ilan University near Tel Aviv. 'There is very strong social control. Everyone knows what their neighbours are doing, where they are buying their groceries. People say to themselves 'why should I get into trouble?' by buying [at Shefa Shuk]. A person would risk going to synagogue and finding himself denounced in public.' Mr Wiessman, the AM:PM owner, is silent about the boycott, wary of getting into a public spat with the rabbis that might only make things worse for Shefa Shuk. But price cuts on milk, nappies and other essentials are seen as a sign he is feeling the pinch. A representative of the Sheetrit media group that represents both AM:PM and Shefa Shuk stresses that Mr Wiessman is sensitive to ultra-orthodox concerns, having pulled pork products from the shelves of AM:PM after buying the chain 18 months ago. But the boycott 'is not about the Sabbath at all', the representative says. The real reason for it, the representative says, is economic. An ultra-orthodox businessman is in the process of opening a new grocery chain aimed at the haredi market and the ban on Shefa Shuk helps reduce its competition, the representative said. Mr Wiessman's refusal thus far to yield to the haredi demands is not because he sees himself as fighting for a more secular Israel. 'He does not have a secularist agenda but at the same time it should be clear he will not tolerate people threatening him,' the representative says. Still, secularists believe there is a great deal at stake in Mr Wiessman's holding firm. 'This is an abuse of power, a gross intervention because it would steal from Tel Aviv the wonderful feeling of freedom it has,' Tel Aviv city councillor Zohar Shavit says of the demand to close the AM:PM stores. 'Any attempt to force the closure or opening of commercial bodies or cultural institutions constitutes intolerable intervention in the texture of life in the city. Tel Aviv is the beating heart of Israeliness and secular Hebrew culture. One of the most important principles of this culture is the freedom to choose. I can choose to buy on the Sabbath or not, like any other person, religious or non-religious.' Shlomi Laufer, a columnist in the Yediot Ahronot newspaper, added his own exhortation to Mr Wiessman. 'Don't give up. Your decision will impact on every business owner in Israel. You may be harmed financially but there are things more important than money such as the secular, liberal and free character of Israel,' he wrote. Rabbi Goldknopf, meanwhile, is in no mood for compromise. He says that even if Mr Wiessman agreed to close some of the AM:PM branches on the Sabbath, it would not be enough to reverse the rabbis' decision. 'Compromise?' he asks. 'Our compromise is that AM:PM be open from the end of the Sabbath until Friday afternoon' before the start of the following Sabbath at sunset. 'You can't take the Sabbath and make a joke out of it. The Lord said the Sabbath must be observed. Can we say it is all right that it is 50 per cent observed?'