Scandal Threatens Olmert's Premiership

"If they decide to go to early elections, we're jobless for another year," said Saeb Erekat, a Palestinian negotiator. "We'll see more settlements and more Israeli army incursions rather than more talks. Unfortunately, that's the kind of election campaign they usually have."

There are numerous candidates waiting in the wings with hopes of replacing Olmert.

Foreign Minister Tzipi Livni, a fellow Kadima member, is next in line to succeed Olmert, but there are questions over whether she would be able to hold together his already shaky coalition -- which includes an ultra-Orthodox party said to be uncomfortable with the idea of a female prime minister.

Livni has been Israel's chief negotiator in the peace talks with the Palestinians.

Defense Minister Ehud Barak, who leads the Labor Party, is also believed to covet the top job and could bring Olmert's government down if he pulls Labor from the coalition.

That would trigger new elections, but such a move is considered risky because, according to recent opinion polls, opposition leader Binyamin Netanyahu is the nation's most popular politician. Netanyahu, leader of the Likud Party, has been a fierce critic of the Annapolis peace process and has advocated greater military efforts against the Islamist movement Hamas in the Gaza Strip.

Hamas on Sunday shut down the territory's only power plant, saying it had run out of fuel supplied by Israel, the Associated Press reported from Gaza City. Israel said Hamas was creating an artificial crisis.

At a cabinet meeting Sunday, top Kadima ministers expressed support for the embattled prime minister. But even within the party, there are doubters.

"For the time being, we will support him," said Schneller, a Kadima member of Israel's parliament, the Knesset.

But Schneller said that if the investigation appears headed toward an indictment or if Olmert gives up too much ground to the Palestinians during their negotiations, the party should not hesitate to abandon him.

So far, Olmert has shown no signs of a willingness to yield.

An official in Olmert's office, who spoke on the condition of anonymity, said the prime minister has instructed staff to proceed with business as usual.

"He's moving forward with his agenda," the official said. "He's convinced that he has done nothing wrong, that he didn't break any laws and that this will blow over."

Some legal experts say it might.

Menachem Hofnung, an expert in Israeli campaign finance laws, said it could be hard to prosecute Olmert because the law requires both an offense and criminal intent. "We don't yet know the full extent of the allegations, but if it's related only to campaign finance laws, it will be difficult," he said.