OLMERT FINALLY RESIGNS

by Peter Hirschberg

(IPS) JERUSALEM -- The announcement July 30 by Prime Minister Ehud Olmert that he will resign as soon as his ruling Kadima party has chosen a new leader in mid-September did not shock Israel's political establishment, but it did crystallize the political timetable: Israel will either have a new prime minister by early November or Israelis will be back at the polls for a general election in the first few months of next year.

Beset by corruption allegations, Olmert has been under growing pressure in recent months to stand down and he finally succumbed Wednesday, announcing at a surprise press conference at his official Jerusalem residence that he would not run in the Kadima leadership primaries to be held Sept. 17.

"Once the party has chosen a new leader, I will resign from my post as prime minister to enable them to put together a new government quickly and efficiently," he said.

Olmert has never fully recovered from the Lebanon war two years ago, when he launched a fierce military campaign against Hezbollah after the Shia group abducted two Israeli soldiers and killed three more during a cross-border raid on the Lebanon-Israel border. A government report severely criticized his handling of the war, and his public approval ratings have only occasionally climbed above 20 percent since.

When U.S. businessman Morris Talansky told a Jerusalem court in May that he had given Olmert some $150,000 in cash to cover, among other things, personal expenses, it was clear Olmert would not see his term through to November 2010, when the next election is scheduled.

His situation became even more tenuous when fresh allegations emerged a few weeks ago, with Olmert accused this time of submitting duplicate claims for travel expenses to charities that had sponsored his trips abroad. Olmert has denied all of the allegations, which relate to the period before he became prime minister, and had initially said he would only resign if indicted.

In his address, broadcast live on all three main TV channels, he said he had become the target of a "slander campaign," which he intimated was being conducted by the police and the state prosecution. He said he had found himself "subject to a wave of investigations, examinations and criticism immediately after being elected."

Zevulun Orlev, leader of the opposition, right-wing National Religious Party, is unforgiving. "Olmert has hardly been a beacon of honesty," he told IPS. "If he said 'good morning' to me, I wouldn't believe it was morning until I went to the window to check."

After the court appearance by Talansky, Labor Party leader Ehud Barak told the prime minister that if he did not allow Kadima to hold a leadership primary, he would precipitate an early election. Left with little choice, Olmert agreed and earlier this week Kadima set Sept. 17 as the date for the leadership vote.

Once the ruling party has a new leader, the President will then ask the member of parliament with the greatest chance of forming a government -- most likely Kadima's new leader -- to do so. They then have a maximum of six weeks to try and construct a new coalition. If they fail, a general election will be held within 90 days.

It is not altogether unfeasible that Olmert could still occupy the prime minister's office for another six months, since he will remain at the head of a transitional government from the moment he resigns until a new government is formed.

In his address Wednesday, Olmert said he believed there was "a broad public foundation" for a new Kadima-led government and that he expected one to be formed "within a short time."

But with the key parties in any future coalition holding divergent views on the peace process and also having conflicting budgetary demands, there is no guarantee that the new leader of Kadima will succeed. The ultra-religious Shas party wants the government to reinstate hundreds of millions of shekels in child allowances that were cancelled by the previous government under Ariel Sharon, but the Labor Party strongly opposes such a move. And, whereas Labor enthusiastically supports peace moves, Shas opposes major concessions to the Palestinians and the Syrians.

"There is certainly a chance of putting together a coalition," Kadima lawmaker Otniel Schneller, who has been a strong supporter of Olmert, told IPS. "The big question is whether we will be able to get the budget passed. With the world economy struggling, we will have to keep the budget tight and so it will depend on whether a party like Shas understands this. The word 'child allowances' is just a word. You can always call it something else."

Orlev is predictably more skeptical. "The chance of a new government being formed is very low," he told IPS. "The smell of elections is in the air and so when it comes to the coalition negotiations no party will want to be seen to be compromising. That's because they know elections could be just around the corner and they might not be judged so kindly by their voters if they do."

With Olmert having set a date for his resignation, attention will now switch to the leadership battle within Kadima, which is already shaping up as a two-horse race. The current front-runner is foreign minister Tzipi Livni, but transport minister Shaul Mofaz is mounting a serious challenge as well.

Livni is popular among the general public, who view her as measured, responsible and as a model of clean, corruption-free politics. Mofaz will try to play up his military past -- he is a former army chief and a former defense minister.

While Livni will tell Kadima members that she has the best chance of winning a general election -- polls show her garnering more seats than a Mofaz-led Kadima in an election -- Mofaz will tell them that he has a better chance of cobbling together a new governing coalition, in part because of his more hawkish views on the peace process.

With former prime minister Benjamin Netanyahu, who heads the center-right opposition Likud party, holding a clear lead in opinion surveys, Kadima members are not keen to rush to the polls, and Mofaz's message could prove persuasive.

"Livni will put the peace process at the forefront," says Schneller. "She will say that we have to move forward on this front and that we have to go to the people (in an election) and win their support."

Mofaz, he says, will focus on security concerns, especially the threats posed by Hamas and Hezbollah. "He will say he can form a broad government and that with Israel facing serious security issues, now is not the time for elections."

Olmert said Wednesday evening that he would continue to push forward in negotiations with the Palestinians and with indirect talks Israel has been conducting with Syria. "As long as I remain at my post I will not stop trying to continue to bring the negotiations between us and our neighbors to a successful conclusion," he said.

Orlev is incensed. "Olmert has no right to continue conducting negotiations," he said. "He has lost the support of parliament and of the people. He no longer has legitimacy."

Orlev need not be overly concerned. With Olmert having announced his resignation, any significant progress in talks with the Palestinians or the Syrians is now highly unlikely.