Scandal Threatens Olmert's Premiership

Corruption Probe of Israeli Leader Could Undermine U.S.-Backed Peace Talks

JERUSALEM, May 11 -- When President Bush travels to Israel this week, he will come knowing that if he wants to broker a Middle East peace agreement, he has only eight months left to do it.

His Israeli counterpart may have even less time to make a deal.

Prime Minister Ehud Olmert, whose grip on power seemed relatively solid just last month, is now seen in Israel as a political short-timer who could be jettisoned from office at any moment by a burgeoning corruption scandal.

The scandal centers on evidence that Olmert may have taken hundreds of thousands of dollars in bribes from a wealthy New York businessman and fundraiser, Morris Talansky. Olmert has acknowledged receiving money from Talansky during campaigns stretching from the 1990s to 2002. But he has steadfastly denied that he was bribed, saying that the cash was used for legitimate political purposes.

Already, Olmert's career has weathered several corruption investigations without any convictions, and he has a reputation for political survival in the face of tall odds.

Nonetheless, Israeli political analysts say that this may be one scandal too many and that the latest accusations against him are the most serious yet. The investigation -- which became public days before Israel celebrated its 60th anniversary last week -- appears to be gathering steam as police interview former associates of Olmert and collect evidence.

Olmert, leader of the centrist Kadima party, said in dramatic remarks televised late last week that he would step down if indicted.

Whether or not he resigns, the cloud over Olmert could have negative implications for the U.S.-backed peace process, which was already in poor shape before the allegations surfaced.

"If there are fresh elections, then nothing will happen with the negotiations," said Gabriel Sheffer, a political scientist at Hebrew University in Jerusalem. "Not that much was happening anyway."

The talks are going on in secret, but Israeli and Palestinian officials have indicated that wide gulfs remain between the two sides.

Since the negotiations began in Annapolis last November after a seven-year hiatus, Palestinian Authority leaders have sharply criticized Olmert's government for not taking steps -- such as removing checkpoints in the West Bank or halting the expansion of settlements -- to prove it is serious about peace.

But over the past week, Palestinian negotiators have found themselves in the unusual position of expressing hope that Olmert's government survives, because they fear the alternative.