Israel celebrates the 60th anniversary of its foundation as a state today amid an investigation that could unseat the prime minister and derail efforts for a peace deal with Palestinians.
Fireworks and military fanfare launched celebrations last night and Prime Minister Ehud Olmert, who is pursuing a statehood deal with the Palestinians, said Israel "craved" an end to the decades-old conflict.
Boasting a thriving economy, Israel will showcase its achievements with concerts, parties, an airforce aerobatic displays as well as a youth bible quiz that highlights the place of religion in what is largely a secular state.
Fireworks over the Knesset in Jerusalem last night
Israel's most important ally and the chief sponsor of peace talks launched six months ago, US President George W. Bush, visits next week. So do top executives from Google and Yahoo - testament to Israel's success as a technology powerhouse.
"We have created a future for ourselves which surpasses our dreams," President Shimon Peres was quoted as saying in the German newspaper Bildtoday.
Founded partly on the basis of Jewish claims to biblical land and partly as a haven for survivors of European persecution that culminated in the Holocaust, Israel declared independence on May 14th, 1948.
Israel will celebrate under tight security, for fear of militant attacks. Palestinians will hold solemn marches marking the "catastrophe" of the Jewish state's creation when about 700,000 of their compatriots fled or were driven from their homes.
Palestinians have lived under occupation in the West Bank since a 1967 Arab-Israeli war and are now seeking to negotiate creation of their own state as part of a settlement with Israel.
The festivities are clouded by a police investigation into Mr Olmert's affairs that has stoked speculation he may have to quit, upsetting peace talks already beset by squabbles over Jewish settlements and violence in the Hamas-run Gaza Strip.
Already the focus of a series of corruption scandals in which he has denied any wrongdoing, Mr Olmert was interrogated at short notice by police last week over fresh allegations.
A court order has censored details of the suspicions, but Israeli media quoted police officials as saying that reporting restrictions could be lifted this evening.
A Palestinian negotiator said yesterday a resignation by Mr Olmert would delay any agreement on creating a Palestinian state alongside Israel. Mr Bush hopes to broker a deal this year.
Washington said Mr Olmert was a "very important" player in the peace process but noted he was not Israel's only representative. Foreign Minister Tzipi Livni, seen as the likeliest successor to Mr Olmert within his Kadima party, leads Israel's negotiating team.