Second Israeli Minister Pressures Corruption-Embattled Olmert to Resign

Israel's popular foreign minister said Thursday that the ruling party must prepare to replace Prime Minister Ehud Olmert, raising pressure on him to step down amid a growing corruption investigation.

Calls for Olmert's ouster grew this week after the key witness in the case, U.S. businessman Morris Talansky, described handing tens of thousands of dollars to Olmert, in part to finance the Israeli politician's expensive tastes. Foreign Minister Tzipi Livni was the first senior member of his own Kadima Party to question his fitness to stay in office.

"I think the reality has changed since yesterday and Kadima has to make decisions," Livni told reporters in Jerusalem. "I suspect that Kadima needs to start right away acting for every eventuality, including elections."

Livni said she favored holding a party primary to give the public a say in choosing a leader.

"In this way, we can operate to restore the trust in Kadima," she said, without mentioning Olmert by name.

Opinion polls show Livni to be the country's most popular politician, and she would stand a good chance of winning a nationwide party primary. However, she faces many rivals among the party's leadership, and there is no guarantee she would win a contest decided in a smaller forum.

On Wednesday, Defense Minister Ehud Barak called on Olmert to step aside, pledging to pull his Labor Party, a key coalition partner, out of the government and force new elections if the Israeli leader didn't comply.

"The die has been cast," Barak told a meeting of his Labor Party in Tel Aviv. "We should prepare for elections ... in my estimation we are going to elections, it could be before the end of this year."

Olmert has denied wrongdoing and said he would resign only if he is indicted. He has not commented publicly about Talansky's testimony and tried to maintain a business-as-usual appearance.

On Thursday, he hosted the Danish prime minister, and his office released a busy schedule of events for next week, including a trip to Washington to meet President Bush.

Olmert has weathered a string of scandals since he took office two years ago and has vowed to fight the latest accusations. His lawyers are set to cross-examine Talansky on July 17.

Olmert could still hang on to power. With hardline opposition leader Benjamin Netanyahu expected to do well in the next election, both Livni and Barak could be reluctant to push harder to force new elections.

Last year, Livni called on Olmert to resign after a government investigation harshly criticized Olmert's management of Israel's war in Lebanon in 2006. But she was criticized for not following through by resigning. Likewise, Barak never carried out a threat to force Olmert out after the report.

While it remains unclear whether Olmert actually violated any laws, Talansky's testimony painted the Israeli leader in extremely unflattering terms that could make it difficult to stay in office.

The Justice Ministry said Thursday that investigators are speeding up their corruption probe in an effort to wind up the case. Prosecutors are looking into possible bribery, campaign funding violations and money-laundering.

No timetable will be set for concluding the investigation when Attorney General Meni Mazuz meets later Thursday with police and prosecutors, ministry spokesman Moshe Cohen said. But "there is an overriding public interest to wind this thing up quickly," Cohen said. "This is not a regular investigation."

In court on Tuesday, Talansky said he gave Olmert $150,000 of his own money over the years, in addition to unspecified sums from other donors. Olmert insisted on getting the money in cash, and used it to help finance his penchant for high-living, including luxury hotels and first-class travel, Talansky told the court.

The outcome of this latest political crisis could have a profound effect on the fate of Israel's peacemaking with the Palestinians, and on talks with Syria, recently relaunched after breaking down eight years ago.

Recent polls have shown that Netanyahu of the Likud Party, who takes a hard line against the Arabs, stands a good chance of winning, making already fragile peace prospects even more questionable.

Washington has been prodding Israel and the Palestinians to try to conclude a blueprint for a peace deal by the end of his tenure in January. On Wednesday, State Department spokesman Tom Casey declined to speculate on the possible effect of a change in leadership on the U.S.-backed peace process.

"I'll leave it to the Israelis to have their own internal political debate and discussions," Casey said. "We are committed to continuing to work with both sides to move the peace process forward, and that's what we're going to continue to do."

Corruption allegations have clung to Olmert throughout his three-decade political career. The latest investigation is the fifth into his affairs since he was elected two years ago.

Palestinian President Mahmoud Abbas has said publicly that he considered the matter an internal Israeli issue. But his aides have said they are worried about the effect Olmert's woes will have on peacemaking.

Turkey-mediated talks with Syria were only disclosed last week, and there has been no comment from Damascus on Olmert's troubles..