Olmert Tells Cabinet He Will Resign, Stand by Livni

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Prime Minister Ehud Olmert, crippled by a series of corruption investigations, announced he would resign Sunday, clearing the way for his foreign minister to try to succeed him as Israel's next leader.

The prime minister's office said Olmert would submit an official letter of resignation to President Shimon Peres later Sunday, freeing the president to formally tap Tzipi Livni to try to put together a new government. Weeks ago, Olmert promised to step down after his governing Kadima Party elected a new chief to replace him.

Livni, a rival of Olmert's, won that race last week by a narrow margin, but that victory did not assure her the premiership. Peres must first assign her the task of trying to cobble together a government, giving her six weeks to forge a coalition. Should she fail, parliamentary elections would be called for early 2009, a year and a half ahead of schedule.

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Olmert is expected to stay on as caretaker prime minister until a successor is in place.

At the weekly Cabinet meeting on Sunday, Olmert notified ministers of his intention to resign, pledging to help Livni "with all my might to form a government."

Livni and Olmert have had a tense working relationship since she called on him to resign in May 2007 after a government report harshly criticized his handling of the war against Lebanon the previous year. Livni also was one of the first voices to call on him to leave office this year after a key witness in a corruption case said he had given illicit payments and fancy gifts to Olmert.

Polls show that in the event of a parliamentary election, Kadima would be in a tight race with the hawkish Likud Party, headed by opposition leader Benjamin Netanyahu, a former prime minister.

As prime minister, Livni would be expected to pursue a moderate and pragmatic course in peacemaking with the Palestinians and Syria. Netanyahu takes a tougher line in peace talks, and Israel's relations with the Arab world suffered when he was prime minister in the late 1990s.

Any accords that might emerge from talks with the Palestinians and recently renewed, indirect negotiations with Syria would benefit from broad-based parliamentary backing.

Over the weekend, Livni met with potential coalition partners, including two small factions that are not part of the current government, which controls 67 of parliament's 120 seats.

Neither Kadima nor its coalition partners appear eager for a new election, fearing they would be ousted from power. But the ultra-Orthodox Shas Party, which could be key to building a new coalition, has already said it would not join a government willing to share Jerusalem with the Palestinians.

As lead peace negotiator, Livni is committed to discussing all the outstanding issues between Israel and the Palestinians. The fate of Jerusalem, whose eastern sector the Palestinians claim for a future state, is at the core of the conflict.

Kadima was founded in 2005 by then-Prime Minister Ariel Sharon. But Sharon suffered a debilitating stroke in early 2006, pushing Olmert into the leadership role.

Olmert led Kadima to victory in 2006 parliamentary elections. But his term in office was troubled by a series of police investigations, Israel's inconclusive 2006 war against Lebanese Hezbollah guerrillas and months of peace talks with the Palestinians that have yielded no breakthroughs.

The police investigations focus on Olmert's financial dealings in the years before he became prime minister. Police have recommended he be indicted on counts that include bribery and money laundering, but prosecutors have not decided whether to press charges. Olmert denies any wrongdoing.