Talking with a few foreign journalists 10 days before Wednesday's Winograd report on the 2006 Lebanon war, a senior member of Israel's cabinet suggested that the report would not unseat Prime Minister Ehud Olmert but that his negotiations with the Palestinian President Mahmoud Abbas might.

It looks as if the first prediction is going to be proved right. However devastating the Winograd commission's critique of the prolonged mismanagement of the war – and most of it is exactly that – Mr Olmert is likely to survive it. Last May Ehud Barak, the Defence Minister, threatened to pull Labour out of the coalition if Mr Olmert was not replaced by his own party, Kadima, after it came out. But Kadima has up to now closed ranks, which means that by walking out, Mr Barak would trigger an election which the polls suggest not he but Benjamin Netanyahu's Likud would win.

Mr Barak could just make good on his threat and put the loyalty of Mr Olmert's potential Kadima challengers to the supreme test. But the raw politics make it high risk. For the threat from within his own party to Mr Olmert seems to have been eliminated by the nearest thing to a jail free card that Winograd gave the Prime Minister. The biggest problem for Mr Olmert in the final Winograd report – given the savage criticism of the early days of the war in the first one – was always going to be the last bloody weekend of the war, in which a ground invasion continued for two days after the UN Security Council had agreed peace terms in New York. Despite its withering criticisms of the operation, Winograd determines that Mr Olmert believed "sincerely" that he was acting in "Israel's interest".

Never mind that the report itself found no evidence of any serious discussion at the time of whether anything could be achieved in the time allowed for the operation – in which 33 Israeli soldiers, let alone the Lebanese casualties, were killed – and even more amazingly, of whether it was sensible to prolong it once the UN deal had been reached in New York. The formulation in Winograd has enabled Mr Olmert to argue that the "moral stigma" had been removed from his conduct.

Secondly Mr Olmert may have been perversely assisted by the Winograd judgement that the war was a "missed opportunity". Amir Peretz, who was defence minister at the time and resigned last year, maintained that this phrase showed the war was "necessary". In fact as the commentator Tom Segev pointed out yesterday, Winograd essentially ducked the question of whether it was right to go to war at all, only saying archly that "it did not determine that [it] ... was unjustified".

The report's implications, of course, extend far beyond Israel. Human rights groups have understandably attacked Winograd for not focusing on the hundreds of civilian casualties in Lebanon – though the report does urge reconsideration of cluster bombs on the grounds that Israel's use of them contravenes international law. But this was always going to be an Israel-centric report.

This still means that it should be read closely in the US and by the European governments which unquestioningly continued to support a war in pursuit of which they now learn that Israel had not even chosen between the options of what kind of engagement it would be, and did not have an exit strategy.

Immediately, however, the focus is on Mr Olmert's future, and that brings us back to the second half of our Israeli cabinet minister's prediction. What he meant was that somewhere along the road of the negotiations with Mr Abbas, Mr Olmert will have to face a clear choice – whether to stake his premiership on the genuine concessions, notably on borders and Jerusalem, that he will need to make if Mr Abbas is to be in any position to make ones of his own. The religious party Shas will almost certainly leave the coalition if he does. Mr Olmert could just try to struggle on with the Knesset support – if he can get it – of the left-wing Meretz and the Arab parties, as Yitzhak Rabin was obliged to do in the 1990s.

The minister said he did not know whether Mr Olmert would risk everything for the deal he says is in Israel's interests or simply regard the cause of his own survival as paramount. If anything, the Winograd report does not encourage early Israeli concessions, because of its concluding implication that Israel can only hope for peace when it has first made the "deep" changes needed to rehabilitate its military strength.

But either way it is the already badly faltering and obstacle-strewn path to a negotiated deal with Ramallah, and not Winograd itself, that will provide Mr Olmert's real moment of truth.