Isabel Kershner
The New York Times
July 31, 2008 - 3:49pm

Prime Minister Ehud Olmert, embroiled in a high-profile corruption investigation, announced on Wednesday that he would resign after his party chose a new leader in September elections.

The televised announcement injected new uncertainty into Israeli politics and the Middle East peace effort, coming just as Mr. Olmert has been intensifying negotiations with the Palestinian Authority as well as Syria.

It also raises questions about the political legacies of both President Bush and Mr. Olmert, who have hoped to burnish their reputations by achieving breakthroughs in Middle East peace talks before leaving office.

Mr. Olmert’s domestic credibility has sunk so low that it is unclear whether he still has the legitimacy or the political traction to make historic concessions to Arab adversaries at all.

His political weakness may also undermine his ability to work in partnership with the Americans in pursuit of Middle East peace.

The prime minister, speaking live on Wednesday on Israeli television, passionately reiterated his commitment to peace but acknowledged that the corruption allegations made it impossible for him to continue in his office.

“The current slander campaign,” Mr. Olmert said, “including by people who truthfully believe in the virtue of the state and its image, raises a question I cannot and will not ignore: What is more important? Is it my own personal justice, or the public good?”

Many commentators described his speech as statesmanlike, allowing him to leave office with a modicum of dignity and the air of a man who — belatedly in the eyes of his many critics — had finally done the right thing.

Previously, Mr. Olmert had pledged to resign only if charged. On Wednesday, he vowed that he would continue to fight the legal battle and prove his “innocence and clean hands.”

Mr. Olmert is suspected by the authorities of crimes including bribery, fraud and breach of trust, but he has not been charged with anything so far. He admitted to having made “mistakes” before he became prime minister in 2006. In one high-profile case, Mr. Olmert is suspected of having received tens of thousands of dollars in cash from Morris Talansky, a Long Island fund-raiser and financier, over a period of 13 years.

In the latest case, known here as “Olmert Tours,” the prime minister is suspected of having billed multiple state and charitable agencies for the same flights when he was mayor of Jerusalem and a government minister, using the extra money for private family trips. The police and the Justice Ministry publicized details of that investigation on July 11.

Several other investigations against him have been pending for months. It is unclear when they will be resolved.

At once composed and defiant, Mr. Olmert devoted the first part of his almost 10-minute speech to extolling his government’s achievements on issues like security and poverty. But some of his most emotional statements were about his commitment to peace.

“I continue to believe wholeheartedly that reaching peace, ending terrorism, strengthening security and establishing a different relationship with our neighbors are the most vital goals for the future of the state of Israel,” he said, adding that American support and the leadership of Mr. Bush had “greatly contributed” to the effort.

A White House spokesman, Gordon D. Johndroe, said that Mr. Olmert and Mr. Bush spoke just before the announcement. Mr. Bush “wishes him well and will continue to work closely with him while he remains prime minister,” Mr. Johndroe said. He went on to describe relations with Israel during Mr. Olmert’s tenure as “exceptionally close and cooperative” and expressed confidence that the relationship would continue.

A spokesman for the Palestinian president, Mahmoud Abbas, who has staked his own reputation on the peace effort, described Mr. Olmert’s resignation plans on Wednesday as an “internal affair.” The spokesman, Nabil Abu Rudeineh, said, “The Palestinian Authority deals with the prime minister of Israel, regardless if he is Olmert or somebody else.”

Mr. Olmert said that Israel was “closer than ever” to reaching understandings that might serve as a basis for agreements with the Syrians and the Palestinians, adding that he would work until his last day in office to bring the negotiations to a successful conclusion “that bears hope.”

So far, however, six months of talks with the Palestinians have not yielded any obvious results, while Syria continues to insist on talking to Israel indirectly through Turkish mediators.

Mr. Olmert’s drive for diplomatic achievements “might frighten some,” said Abraham Diskin, a political scientist at the Hebrew University of Jerusalem. There are Israelis who do not believe in agreements, and others who support the peace effort but do not feel comfortable having their leader negotiate desperately with an eye on the clock. “I belong to that second category,” Mr. Diskin said.

The future of the talks will depend largely on who emerges as Israel’s next leader.

The leadership race in the governing Kadima Party has been set for Sept. 17, with a runoff, if necessary, on Sept. 24. The main contenders are Foreign Minister Tzipi Livni, who leads the Israeli team in talks with the Palestinians, and Shaul Mofaz, the more hawkish transportation minister who is a former defense minister and a former army chief of staff.

In recent polls, Ms. Livni was leading, but Mr. Mofaz was closing the gap.

Mr. Olmert had left open the possibility of competing himself until Wednesday, though few expected that he would.

Although Mr. Olmert has pledged to resign after the vote, he will remain as a transitional prime minister until his successor can form a new government able to garner a majority of 61 votes in the 120-seat Parliament. That government would try to survive until a general election scheduled for 2010.

If the new Kadima leader fails to form a government, Israel will hold an early election, probably in early 2009, giving Mr. Olmert a few extra months in office.

Mr. Olmert’s rivals within his own party and his partners in the governing coalition have not been eager for early elections. Opinion polls have indicated that the victor would be Benjamin Netanyahu, leader of the rightist Likud Party.

Nevertheless, under fierce pressure from Olmert critics, Defense Minister Ehud Barak, the leader of the Labor Party, a main coalition partner, urged Mr. Olmert to step aside in May pending the outcome of the police investigations, then forced the prime minister to agree to a party primary instead.

The September leadership vote will be a first for Kadima, which was formed in 2005 by Ariel Sharon, the prime minister at the time. Mr. Olmert became acting prime minister when Mr. Sharon had a stroke in January 2006 and prime minister when Kadima won an election in March 2006.

His term in office has been plagued by problems. In June 2006, an Israeli soldier was captured by Hamas and other Palestinian militant groups and taken to Gaza. Israel is still trying to negotiate his release.

In July 2006 two more soldiers were captured on Israel’s northern border, setting off a war with the Lebanese militia Hezbollah. Mr. Olmert was excoriated in an April 2007 preliminary report on government and military failings in conducting the war but adamantly refused to resign.

In October 2007, Mr. Olmert announced that he had early-stage prostate cancer that his doctors said could be treated and cured.

In the end, though, it was the testimony of Mr. Talansky from Long Island that brought the prime minister down.


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