Quit over corruption scandal, coalition partner tells Olmert

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THE Israeli prime minister Ehud Olmert's main coalition partner yesterday demanded that he step down, amid claims that a United States businessman had handed him envelopes stuffed with thousands of dollars in cash.

The demand, which did not include a deadline, marked the biggest threat to Mr Olmert's grip on power since a corruption scandal over his relations with the American-Jewish businessman Morris Talansky erupted a month ago.

Mr Talansky's court testimony on Tuesday contradicted the prime minister's insistence that he had not used any of the cash payments he had received while he was mayor of Jerusalem and industry minister for personal use.

Ehud Barak, the defence minister and head of Israel's Labour Party, told a news conference that Mr Olmert must leave office, either temporarily or permanently, through "suspension, vacation, resignation, or declaring himself incapacitated". If the premier clung on to power, Mr Barak said he would force early elections.

"Mr Olmert cannot deal with the challenges facing Israel, such as Hamas, Hezbollah, Syria, Iran and the captive soldiers, and at the same time handle his own self-defence," Mr Barak said.

Aides to the prime minister, who has denied wrongdoing, insisted that he would not step down and that Mr Talansky's testimony would be shown to be inaccurate.

Mr Olmert is engaged in negotiations with the Palestinian Authority and Syria and his mounting troubles have raised further questions about the viability of these discussions. A spokesman for the Palestinian president, Mahmoud Abbas, said: "There is no doubt that what is happening in Israel will have negative repercussions on the negotiating track."

Mr Olmert's most likely replacement would be the foreign minister, Tzipi Livni, from his own Kadima Party. However, there was scepticism over whether Mr Barak would carry out his threat to force early elections, given polls indicating Labour would be trounced and the hard-line Likud Party leader, Benjamin Netanyahu, would win decisively.

Yossi Alpher, a former director of the Jaffee Centre for Strategic Studies at Tel Aviv University, said: " Mr Barak's appeal can only resonate if most of the 29 Kadima MPs insist on dumping Mr Olmert. So far, they are not turning out to be champions of ethics."

In his testimony, Mr Talansky said he gave Mr Olmert, or his aide, Shula Zaken, about $150,000 (75,000) over a 15-year period. Some of this was for holidays, luxury suites and other private spending, he said.

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