Scandal Threatens Olmert's Premiership
Corruption Probe of Israeli Leader Could Undermine U.S.-Backed Peace Talks

By Griff Witte
Washington Post Foreign Service
Monday, May 12, 2008

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.

"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.

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