Rivals: Israeli PM must quit over 'bribes'

JERUSALEM (AP) -- Ehud Olmert's political opponents demanded his resignation Friday, saying new allegations that the Israeli prime minister illegally accepted hundreds of thousands of dollars from a U.S. citizen render him unfit for the country's top job.

Reading a statement on national television Thursday, Olmert said he would resign only if formally indicted. He denied any wrongdoing in the case, which could force him from office and derail fragile peace talks with the Palestinians.

"I am looking all of you in the eye, and I say I never took bribes; I never took a penny for myself," he said.

But some Israeli lawmakers critical of Olmert said the new police investigation -- the fifth opened into the prime minister's activities since he took office in 2006 -- was reason enough for him to leave office.

Olmert's legal troubles are diverting his attention from running the country, and "a state like Israel, with an existential threat, needs a full-time prime minister," said Arieh Eldad of the hardline National Union party.

"We need a much better leader at this time, and Israel should go to general elections in order to replace him with a better government," Eldad said.

Eldad's call was echoed by other politicians from opposition parties and by a small number of lawmakers who belong to Olmert's governing coalition. Shelly Yachimovich of the Labor Party, a junior partner in the government, told Israel Radio that Labor "cannot remain in the same coalition with a prime minister tarnished by such deep corruption."

Labor's departure would bring down Olmert's government and probably lead to elections, currently scheduled for late 2010. But that possibility still appears remote. Neither Labor nor any of Olmert's other coalition partners has indicated that they would bolt over the new allegations.

According to police suspicions, Olmert accepted hundreds of thousands of dollars in illegal contributions from American Jewish businessman Morris Talansky before becoming prime minister. Watch a report on the investigation »

Olmert denied any improprieties in his speech Thursday and offered what might prove to be his central line of defense: His campaign finances, he said, were the responsibility of a lawyer named Uri Messer. Messer is a longtime Olmert confidant who has been linked to other corruption suspicions involving the prime minister.

Yoel Hasson, a lawmaker from Olmert's Kadima Party, said, "I certainly accept his version of events."

"You don't topple and replace governments or prime ministers because of allegations and investigations," Hasson told Israel Radio.

The new suspicions are more likely to end Olmert's career than the previous ones, because this time Messer appears to be cooperating with police, said Israeli legal expert Moshe Negbi.

"I think this time it's very serious," Negbi said. The maximum sentence for bribery would be seven years in prison, he said, but even lighter charges of campaign finance violations would force Olmert to step down.

Patrons of one downtown Jerusalem cafe Friday said Olmert had to go.

"I'll tell you the truth: When I see the newspapers and listen to the radio, it's not good, not good," said Avraham Fixler, a pub manager. "He should be a gentleman and go home."

Olmert said he would not fight to stay in office if formally charged.

"I was elected by you, citizens of Israel, to be the prime minister, and I don't intend to shirk this responsibility. At the same time, and even though the law does not require me to do this, I will resign from my job if the attorney general decides to issue an indictment against me," he said.

Olmert said Talansky had contributed to his two Jerusalem mayoral campaigns and a campaign for chairman of the Likud Party before he left to join Kadima. Talansky also gave him money to cover campaign debt retroactively, he said.

Talansky's attorney, Jack Chen, declined a request Friday to interview his client and would not comment on the case.

Talansky told Channel Two TV that he was in Israel visiting family for the Passover holiday when police called him in for questioning. He said he was "baffled" by the case and did nothing wrong.

"They knocked on my door at 6 in the morning, and it was the national police, and they asked me to come with them, and I obliged ... and it was very surprising. When they asked me details, I said whatever I know," Talansky said.

Referring to his relationship with Olmert, he said, "We are very, very friendly and I used to meet him all the time at dinners in New York."

The charges threaten to further weaken Olmert's hold on power and potentially undermine the peace talks with the Palestinians launched in November at a U.S.-hosted Mideast peace conference at Annapolis, Maryland.

Palestinian negotiator Saeb Erekat said his government was following the developments "very carefully."

"Internal problems in Israel have been reflected in the past in more escalation and more settlements," he said, and if Olmert is forced out and early elections ensue, "the peace process will be on hold for a year."

Israeli public opinion polls predict an easy victory for former Prime Minister Benjamin Netanyahu and his Likud Party if elections were to be held today. Likud takes a much harder line on territorial concessions to the Palestinians than Kadima does.

Peace talks are already dogged by longstanding conflicts over security and settlement-building. Questions about the health of Palestinian President Mahmoud Abbas, after an unannounced heart test, have added another layer of uncertainty to peacemaking.

The White House said the case would not alter President Bush's planned visit to Israel next week, calling the investigation "a matter for the Israeli judicial system."

"The president looks forward to traveling to the Middle East next week to continue to encourage the Israelis and Palestinians to work together for a two-state solution," said Gordon Johndroe, the president's national security adviser.

Olmert is a suspect in several corruption affairs involving real estate deals and questionable political appointments. He has been questioned several times by police but has never been convicted. All of the cases relate to events that took place before he became prime minister in January 2006.

Some of Olmert's close political allies have also had legal troubles. His finance minister had to step down under embezzlement suspicions, and another -- now the country's vice premier -- was convicted of sexual misconduct for forcibly kissing a female soldier.

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