Images: Israeli Prime Minister Ehud Olmert
Avi Ohayon  /  AP
Israeli Prime Minister Ehud Olmert, appearing at his Jerusalem resident on Wednesday, announces that he will resign in September.
msnbc.com news services
updated 7/31/2008 5:51:39 AM ET 2008-07-31T09:51:39

Prime Minister Ehud Olmert's decision to resign amid corruption allegations and his own plummeting popularity has intensified doubts about Israel's prospects for reaching peace deals with the Palestinians and Syria.

Olmert said Wednesday he would not run in his party's primary election Sept. 17 and would step down afterward to allow his successor to form a government.

But because of Israel's political system, he could serve until well into 2009. Possibly hinting at his expectation of being in power for some time, he pledged to work for peace "as long as I am in my position," and said talks with Palestinians and Syria are "closer than ever" to achieving understandings.

'Self-proclaimed lame duck'
But the internal turmoil could make it difficult for Olmert to close deals with either of them, agreements that long have eluded Israeli leaders.

Israeli political analyst Yossi Alpher said Olmert's resignation would at least slow the process.

"The Arabs are asking themselves how useful an agreement with Olmert would be, because he is a self-proclaimed lame duck and he will have a hard time to get his deals approved," Alpher said.

Palestinian Foreign Minister Riad Malki said Olmert's decision would not change much.

"It's true that Olmert was enthusiastic about the peace process, and he spoke about this process with great attention, but this process has not achieved any progress or breakthrough," Malki said. He said the Palestinians would deal with any Israeli government.

Olmert spoke as his delegation to indirect talks with Syria returned from a fourth round in Turkey. The two sides set another round for August.

Bush pledges continued cooperation
White House spokesman Gordon Johndroe said President Bush called Olmert to pledge his continued cooperation.

Political analysts had been predicting Olmert's resignation for weeks as details of the latest allegations against him dominated the news.

The most damaging inquiry focuses on American Jewish businessman Morris Talansky, 76, who testified he gave Olmert envelopes stuffed with tens of thousands of dollars before he became prime minister, in part to finance Olmert's lifestyle of expensive hotels and fat cigars.

Olmert has never been formally charged with a crime.

The latest allegation is that Olmert double and triple-billed trips abroad to Jewish institutions, pocketing the difference or financing trips for relatives. Other allegations include a shady real estate deal and questionable political appointments — all before he became premier.

On Thursday, an Israeli police spokesman said Olmert would be questioned for a fourth time Friday as part of the investigation.

"Olmert will be questioned on Friday at his official residence in Jerusalem," police spokesman Micky Rosenfeld said.

Criticism of investigations
Olmert's brief address from his official Jerusalem residence included harsh criticism of the police investigations. He said he was choosing the public good over personal justice.

Although he has consistently denied wrongdoing, he had pledged to resign if indicted.

"I was forced to defend myself against relentless attacks from self-appointed 'fighters for justice' who sought to depose me from my position, when the ends sanctified all the means," he said, appearing angry.

Olmert did not answer questions from reporters gathered in his courtyard.

His decision not to run in the Kadima primary set in motion a process to choose a new prime minister. Main candidates in his party are Foreign Minister Tzipi Livni and Transport Minister Shaul Mofaz, a former defense minister and military chief of staff.

Polls show Livni with an advantage in the primary. If she were to replace Olmert, she would become the second female prime minister in Israeli history, after Golda Meir.

If Olmert's successor as party leader can form a coalition, Israel could have a new government in October. If not, an election campaign could extend into 2009. Olmert would remain in office until a new premier is chosen, heading a caretaker government after he submits his resignation to President Shimon Peres.

Olmert's Kadima Party has 29 seats in the 120-member parliament, and his successor must patch together a majority coalition. Olmert's main partner, Labor, is headed by another ex-premier, Ehud Barak, who would like his old job back and may be more comfortable forcing an election than playing second fiddle to Livni.

Hard-line Netanyahu up next?
Israel's labyrinthine political system is weighted against a quick internal Kadima resolution to the crisis — with hard-line ex-premier Benjamin Netanyahu of Likud waiting to take advantage. Netanyahu opposes most concessions to the Palestinians and Syrians suggested by Olmert.

While neither the Palestinians nor Syria would be eager to close a deal with a lame-duck leader, the prospect of Netanyahu lurking in the wings could propel them forward.

On Thursday, Netanyahu called for a new parliamentary election.

Recent opinion polls suggest Netanyahu's Likud party would win a snap election.

"This government has reached an end and it doesn't matter who heads Kadima. They are all partners in this government's total failure," Netanyahu told Israeli Radio.

"National responsibility requires a return to the people and new elections," he said.

Olmert, 62, gained governing experience in a decade as mayor of Jerusalem. He was named vice premier as a move of political expediency when it appeared that Ariel Sharon would serve indefinitely. Olmert took over as premier after Sharon suffered a massive stroke in January 2006.

During his address Wednesday, he said, "Did I make mistakes over my political career? Without a doubt, yes, and I regret them and I am sorry. But is the real picture that which is presented to the public? Absolutely not."

The Associated Press and Reuters contributed to this report.

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