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Turmoil ahead for Israel PM says he will resign

JERUSALEM, July 31 – Israel on Thursday faced weeks of political turmoil after Prime Minister Ehud Olmert said he would step down in September, in a surprise move that casts a shadow over Middle East peacemaking efforts.

Wednesday’s announcement opened the way for political jockeying within Olmert’s centrist Kadima party which is scheduled to hold an unprecedented primary on September 17.

It also spurred renewed calls for snap elections to pick a new prime minister.

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

He also made it clear that he had no intention or reaching any deal with the new Kadima leader following the party’s leadership primary.

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

Opinion polls indicate Netanyahu is a favourite to replace the embattled Olmert, whose time in office since early 2006 has been dogged by a string of corruption allegations.

Olmert’s decision also raised questions over the next steps in the hobbled peace process with the Palestinians and recently launched indirect talks with long-time foe Syria.

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But the US administration, which has played a key role in the Israeli-Palestian negotiations, insisted Olmert’s departure would not dampen the peace process.

Asked if US President George W. Bush still hopes that an Israeli-Palestinian peace deal can be reached this year, national security spokesman Gordon Johndroe said in Washington: "We will continue to work on a deal before the end of the year."

The long-dormant peace talks were revived at a US conference in November with the goal of resolving the decades-old conflict by the end of 2008, but have made little tangible progress since.
Johndroe said Bush had spoken with the 62-year-old Olmert just before his announcement, adding that the US president "wishes him well."

Announcing his decision on Wednesday, Olmert insisted he was innocent of allegations of graft that in recent months led to a chorus of calls for his resignation.

His surprise announcement marked the apex of a political storm unleashed when police launched a probe in May over suspicions he had accepted vast sums of money from US financier Morris Talansky to fund elections campaigns and a lavish lifestyle in the 13 years before he became premier in 2006.

"I have made mistakes and I regret it," Olmert said in his televised address from his official residence in Jerusalem.

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

He said he will step down after the Kadima primary and stressed he will "happily accept the outcome" of the vote.

Foreign Minister Tzipi Livni, who has traded increasingly sharp barbs with Olmert in recent weeks, and hawkish Transport Minister Shaul Mofaz are seen as the top contenders to replace Olmert at the head of Kadima.

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Defence Minister Ehud Barak, whose Labour party is Kadima’s key partner in the government coalition welcomed Olmert’s announcement. "Prime Minister Ehud Olmert’s decision was appropriate and correct," an aide quoted Barak as saying.

Last month Barak pushed Olmert to schedule an unprecedented party primary by threatening to support a bill to dissolve parliament.

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