World Aug. 01, 2008 - 06:30AM JST ( 9 )

JERUSALEM —

Israel was bracing on Thursday for weeks of political turmoil after Prime Minister Ehud Olmert’s shock announcement that he would step down in September, casting a shadow over Middle East peacemaking.

Wednesday’s announcement opened the way for political jockeying inside Olmert’s centrist Kadima party, which is scheduled to hold a leadership vote on Sept 17, and renewed calls for snap general elections.

“Everyone in this government is responsible for a string of failures. We must let the people decide through new elections,” right-wing opposition leader and former prime minister Benjamin Netanyahu told public radio.

Opinion polls indicate that the Likud leader is a favorite to replace the embattled Olmert, whose time in office since early 2006 has been dogged by a string of corruption allegations and dismal popularity ratings.

“The End of Olmert’s Era,” said the front page of the Maariv newspaper, while the left-leaning Haaretz bluntly declared: “Olmert failed in war and failed in peace.”

Olmert’s decision raised questions over the next steps in the hobbled peace process with the Palestinians, revived at a U.S. conference in November, and with recently launched indirect talks with longtime foe Syria.

But U.S. President George W Bush’s administration, which has played a key role in the negotiations with the Palestinians, said it would continue to push for a solution to the decades-old conflict by the end of the year.

Palestinian President Mahmud Abbas said in Tunisia he would “work with any prime minister elected in Israel,” but privately Palestinian negotiators said Olmert had distinguished himself during the recent talks.

The negotiations with Olmert have been “the most important since 1991,” one negotiator who asked not to be named said. “The Israelis listened to us and discussed the issues.”

Another member of the Palestinian negotiating team, Mohammed Ashtiyah, said the prime minister was “serious and involved.”

Olmert and Abbas have met 15 times in the past 12 months.

Palestinian foreign minister Riyad al-Malki said the Palestinian Authority does not think that peace talks will be hit by Olmert’s decision.

“We are not worried by the change in Israeli prime minister because we know that Israel is seriously engaged to remain involved in the negotiation process with the Palestinians,” he told a news conference in Madrid.

Hamas, which seized power in the Gaza Strip in June 2007, said Olmert’s departure signalled the demise of the peace talks which the Islamist movement, pledged to Israel’s destruction, had always rejected.

Hamas spokesman Sami Abu Zuhri called Olmert’s resignation a “huge blow” to the Palestinian Authority, which he said had “hitched its fate to the possibility of achieving an agreement by the end of the year.”

Olmert’s surprise announcement was the crescendo of a political storm unleashed when police launched a probe in May over suspicions he had accepted large sums of money from U.S. financier Morris Talansky to fund political campaigns and a lavish lifestyle in the 13 years before he became premier.

He was to be questioned by police in Jerusalem on Friday for the fourth time since May. The interview is expected to focus on the “Olmert tours” affair in which he is alleged to have billed the same foreign trips several times over.

“I have made mistakes and I regret it,” Olmert said in a televised address from his official residence in Jerusalem as he announced he would step down after the Kadima leadership election.

“I will quit my duties in an honorable, just and responsible manner, as I have acted throughout my mandate. I will then prove my innocence.”

During his time in office, Olmert also came under pressure over the devastating Lebanon war in 2006 which was widely perceived as a failure in Israel.

“The Olmert who spoke yesterday from the garden of his compound in Jerusalem was a crushed and battered man, tainted by allegations, lacking public trust or a sympathetic ear,” Haaretz said.

Foreign Minister Tzipi Livni and hawkish Transport Minister Shaul Mofaz are seen as the top contenders to take the helm of Kadima, and both have said they favor forming a national unity government.

But Netanyahu said he had no intention of reaching any deal with Kadima regardless of its new leader.

“This government has finished its mission, irrespective of who will head Kadima,” said Netanyahu, who served as prime minister between 1996 and 1999.

Wire reports