OLMERT UNDER SIEGE FROM ANGRY ISRAELI PRESS, PUBLIC

Analysis by Peter Hirschberg

(IPS) JERUSALEM -- Israeli Prime Minister Ehud Olmert must be wondering from where the next blow to his increasingly tenuous hold on office is going to come.

He faces a battle over the 2007 state budget that threatens to unravel his squabbling coalition, legal woes over political appointments he made in a previous job, and unrelenting criticism over his management of the military offensive he launched against Hezbollah in Lebanon.

From the giddy heights of the early days of the war, in which his popularity ratings soared to unprecedented levels, Olmert now finds himself fighting for political survival. The new sport among political commentators -- and his political foes -- is predicting how long he has left in office. Only months, say some.

Every day there are new newspaper headlines recounting what the beleaguered Prime Minister plans to do with his shaky ruling coalition: Get rid of Defense Minister and Labor Party leader Amir Peretz and bring in the center-right party of Avigdor Lieberman, which draws much of its support from Russian immigrants who make up some 20 percent of the electorate. Set up a broad national unity government that includes Labor and Olmert's former center-right Likud party. Reshuffle the cabinet and bring in former prime minister and ex-chief of staff Ehud Barak as defense minister to shore up the government's shaky image on issues of defense and security.

And if the headlines aren't about Olmert's political woes, then they are about his legal travails. Earlier this week the state comptroller recommended to the attorney general that he begin a criminal investigation into a string of political appointments Olmert made when he was trade and industry minister in the government of Ariel Sharon. The comptroller is also looking into claims that the Prime Minister purchased an apartment in Jerusalem at below the true market value, in exchange for favors.

If that wasn't enough, the attorney general announced this week that he was disqualifying two members from sitting on a panel Olmert had set up to probe the management of the military campaign against Hezbollah. This will have further dented the standing of the Prime Minister, who is under growing pressure to appoint a full commission of inquiry instead of the committee he has appointed, which cannot authorise steps against serving officials -- like himself.

But with all these torments, Olmert's most acute problem is certainly the fact that the war in Lebanon has robbed him and his government of its main policy flagship -- a unilateral withdrawal from most of the West Bank, including the evacuation of dozens of Jewish settlements there. The Prime Minister recently confirmed at a meeting with members of the Security and Foreign Affairs Committee in parliament that his West Bank pullout plan was on ice for now.

The fighting in Lebanon and Israel's reinvasion of parts of the Gaza Strip -- both of which were triggered by the abduction of Israeli soldiers -- has dulled the Israeli public's enthusiasm for further unilateral moves. In May 2000, Israel unilaterally withdrew from a buffer zone it had occupied for 18 years in south Lebanon, while in August 2005 it withdrew from Gaza and evacuated all Jewish settlements there.

But with Palestinian militants having continued to fire rockets into Israel despite the Gaza pullout and Hezbollah having continued its attacks on the northern border, Israelis have lost faith in unilateralism as a method of managing the conflict with the Palestinians -- and, hence, in Olmert's main policy initiative.

This has left the Prime Minister desperately casting around for a new plan that will reverse his flagging political fortunes. Both Labor leader Peretz and Public Security Minister Avi Dichter, who is a member of Olmert's ruling Kadima party and a former head of the Shin Bet internal security service, have been talking of the need to engage Syria.

But Olmert has squashed that idea. After meeting Thursday in Jerusalem with Russian Foreign Minister Sergei Lavrov, who urged the Israeli leader to call an international peace conference, Olmert said that if Syria was interested in moving "toward peace," it would not host terror organizations in Damascus. "As long as there's terror, there can be no political progress," he said.

If Syria is off the agenda, then Olmert will be looking to the Palestinians as a way to jumpstart a new diplomatic initiative. Earlier this week, Vice Premier Shimon Peres said that Olmert was ready to meet with Palestinian President Mahmoud Abbas after Palestinian militants had released the Israeli soldier they have been holding captive in Gaza since late June.

"Abu Mazen (Abbas) should be invited to talks, and I believe the Prime Minister will do so in the coming days," Peres said in an interview on Army Radio. "Negotiations must be launched on the 'road map,'" he added, referring to the long paralysed Mideast peace plan drafted by the United States and leading European countries.

The moment that Corporal Gilad Shalit, who was abducted by Palestinian militants from a base inside Israel was released, the veteran Israeli statesman said, Olmert would sit down for talks with Abbas. Peres made his comments on the same day that reports emerged that Labor leader Peretz was also calling for a renewal of dialogue with the Palestinians.

Israel has been boycotting the Hamas-led Palestinian Authority ever since the Islamic movement formed the government earlier this year after winning parliamentary elections in January. While Olmert has said he will not talk to Hamas as long as it refuses to recognize Israel, renounce violence and honour all previous agreements between Israel and the Palestinians, he is ready to meet with Abbas, whose more moderate Fatah party lost power to Hamas earlier this year.

With Olmert anxiously trying to fashion a new policy agenda for his floundering government, he might get some assistance -- and certainly some solace -- from a counterpart whose political woes make even his seem surmountable. British Prime Minister Tony Blair is scheduled to arrive in Israel Saturday night for a visit during which he is expected to place the Palestinian issue at the top of the agenda.