Israeli Prime Minister Ehud Olmert's decision to leave office has dealt a serious setback to delicate peace negotiations with both the Palestinians and Syria.

The chances are good the next Israeli leader will take a hard line toward the country's Arab neighbors. But if Olmert is able to lock in some progress in the time he has left, his successor might have a hard time reversing it.

It's also possible that Olmert won't be replaced by a hawk, even though current polls show former Prime Minister Benjamin Netanyahu, who opposes most peace concessions, to be Israel's most popular politician.

In an emotion-filled announcement Wednesday, Olmert said he will step down in September rather than run in his Kadima Party's leadership election, which was called in response to a string of corruption investigations involving the prime minister.

The intricacies of Israel's parliamentary politics could make it possible for Olmert — who faces a potential indictment on charges that he took bribes from an elderly American Jewish businessman — to hold on to office for months, possibly well into 2009.

In his speech, Olmert said that he will fight for peace "as long as I remain in my post" and that "we are closer than ever to concrete understandings" with both the Palestinians and the Syrians.

His decision to resign comes amid momentous but unfinished projects, each of whose outcomes will deeply affect the course of Mideast politics: a U.S.-sponsored effort to forge peace between Israel and the moderate Palestinian leadership in charge of the West Bank, a partially implemented truce agreement between Olmert's government and the Hamas militants ruling the Gaza Strip, and indirect, Turkish-mediated talks with Syria.

Palestinian officials are expressing hope the Israeli political turmoil will not torpedo their fragile talks. Ahmed Qureia, the chief Palestinian negotiator, was in Washington for consultations at the White House and State Department when Olmert made his announcement.

Qureia said Secretary of State Condoleezza Rice remains undeterred in her commitment to a peace deal. "The Americans must know very clearly where we are standing" in the talks, he said, so Washington can help ensure that the next Israeli leader honors any progress made.

Still, the Israeli political upheaval — combined with a weak and divided Palestinian leadership — does not bode well for Mideast peace. Even before Olmert's latest surprise, the sides had been backing away from their stated goal of signing a peace accord by year's end.

Palestinian President Mahmoud Abbas said during a visit to Tunisia on Thursday that the two sides had not agreed on any of the core issues that separate them, such as the borders of a future Palestinian state and the fate of Jerusalem.

Despite Qureia's guarded optimism, other Palestinian officials expressed doubt about being able to close a deal with Olmert now that he is a lame duck.

Israel's other main peace initiative — indirect talks with Syria designed to end their decades-old conflict — could also be at risk. A Syrian Foreign Ministry official confided that the political developments in Israel could "hinder" the negotiations.

It's also possible Olmert's departure could jolt Israel's Arab neighbors toward peace — because of fears of a hawkish successor like Netanyahu.

The former prime minister of the Likud Party is ahead in the polls, and on Thursday he called for early elections. However, Foreign Minister Tzipi Livni, who heads negotiations with the Palestinians, is also a potential successor to Olmert. If she wins the Kadima primary, as seems likely, she will try to cobble together a new coalition without new elections.

There is some hope a leader such as Livni could do a better job of pursuing peace than Olmert, whose rock bottom poll numbers never recovered from what a majority of Israelis saw as his gross mishandling of the 2006 war with Lebanon's Hezbollah guerrillas.

Olmert has been reluctant to carry out confidence-building measures such as removing West Bank roadblocks, releasing Palestinian prisoners and reining in Israeli settlement construction.

One area where Olmert's departure is not likely to have a major impact is Israel's relationship with its main enemy, Iran. Despite some speculation he might try to prop up his tarnished legacy with a daring strike on Iran's nuclear program, that kind of risky move would probably require more political support than the prime minister has.

When it comes to Iran, any Israeli leader will probably have more or less the same policy.

"There is wall to wall consensus across the political spectrum that Iran must not acquire nuclear weapons and therefore Olmert's decision to eventually resign from office has no bearing on the Iranian issue," said Dore Gold, a former Israeli ambassador to the United Nations.