Israeli PM Olmert says he'll step down in 2 months

'After I step down, I will prove my innocence,' says leader under fire

Last Updated: Wednesday, July 30, 2008 | 3:40 PM ET

CBC News

Beleaguered Israeli Prime Minister Ehud Olmert announced Wednesday he will not take part in his party's leadership contest in two months, and will step down to battle a corruption investigation against him once a new leader is in place.

Israeli Prime Minister Ehud Olmert is currently contending with a fifth major corruption case against him since he took office in 2006. (Ronen Zvulun/Associated Press)Olmert, who stands accused of accepting thousands of dollars in cash from an American businessman to fund a lavish lifestyle, again denied any wrongdoing, but said he was beset by the criminal probe into his alleged dealings.

"After I step down, I will prove my innocence," Olmert said in a nationally televised address Wednesday evening from outside his official residence in Jerusalem.

Olmert, whose departure casts a shadow over already troubled peace negotiations with the Palestinians, insisted he has improved the situation in Israel and said he still believes that peace is the most important step for the country.

"By making a decision, I will be opening a window to a better future," he said. "Those who berate me will one day have to come out and face the truth."

Before his announcement, Olmert spoke on the telephone with U.S. President George W. Bush, who expressed his warm wishes to the prime minister and told Olmert he appreciated his friendship, leadership and work for peace, White House spokesman Gordon Johndroe said.

Meanwhile, a spokesman for Palestinian President Mahmoud Abbas called the announcement "an internal Israeli matter," but said Abbas would work with Olmert's successor.

Move could lead to election

U.S. billionaire Morris Talansky's allegations in May seriously damaged Olmert's credibility among Israelis, and the resulting outrage prompted the Kadima party to set new leadership elections for Sept. 17.

Foreign Affairs Minister Tzipi Lipni is viewed by many as the frontrunner to replace Olmert as the centrist party's new leader, but the names of rival candidates should start to emerge in the wake of his announcement Wednesday, the CBC's Peter Armstrong reported from Jerusalem.

Another Kadima cabinet member, Transportation Minister Shaul Mofaz, has already launched his campaign for the leadership contest.

The leadership race could lead to an election if the winner fails to build a coalition after Olmert leaves office. The current government is supported by a fragile coalition with former prime minister and current Defence Minister Ehud Barak's Labour party.

An election could also bring a return to power for the right-wing Likud party and its leader, former prime minister Benjamin Netanyahu.

Talansky testified in an Israeli court in Jerusalem that Olmert accepted roughly $150,000 US during his tenure as mayor of Jerusalem and as a cabinet minister before he was elected as prime minister in 2006.

PM once called himself 'indestructible'

Police suspect the money was meant as bribes — although Talansky insisted he never got anything in return — or illegal campaign financing. Olmert insisted the funds were legal contributions.

Talansky's testimony offered an unflattering portrait of Olmert, whom Talansky described as a bon vivant with a penchant for fancy hotels, fine cigars, expensive watches and first-class travel.

It is the fifth major corruption case against Olmert, who fled Likud in 2005 to form Kadima along with Ariel Sharon, who was prime minister until he suffered a massive stroke in 2006.

Olmert — who once called himself "indestructible" — had previously survived numerous calls to resign in the fallout from his much-criticized handling of the 2006 conflict with Hezbollah guerrillas in southern Lebanon.

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