ISRAELI PRIME minister Ehud Olmert handed a letter of resignation yesterday to president Shimon Peres, opening the way for his successor, foreign minister Tzipi Livni, to form a government.
After meeting all the parliamentary factions today, Mr Peres is likely to select Ms Livni to form a government.
She will have up to 42 days to cobble together a new coalition. If she fails, Israelis will go to the polls in a general election sometime early next year.
Facing mounting corruption charges, Mr Olmert announced in late July that he would step down as soon as his centrist Kadima party had chosen a new leader.
Last Wednesday, Ms Livni narrowly won the leadership race, edging transport minister Shaul Mofaz by a mere 1.1 per cent.
Mr Olmert will remain at the head of a caretaker government until Ms Livni can form a new coalition. Should she fail, he could still be in office for another six months – until a general election is held.
Mr Olmert has made it clear that as long as he remains in office, he will continue to pursue a breakthrough in peace talks with the Palestinians.
Ms Livni, who as foreign minister has been responsible for negotiations with the Palestinians, has already begun meeting potential coalition partners. The two main parties on her radar are the ultra-Orthodox Shas party and the centre-left Labour Party.
In a possible signal that Shas is keen to join a new coalition rather than go to elections, party leader Eli Yishai met defence minister Ehud Barak yesterday and told the Labour leader that this was not the time to shake up the political system.
One problem facing Ms Livni is that Shas wants the issue of Jerusalem taken off the negotiating table with the Palestinians whereas the more dovish Labour Party, which strongly supports talks with the Palestinians, will be reticent to agree to this.
But Ms Livni may have some leverage. Polls show that the Labour Party and two pensioners’ factions – all were part of Mr Olmert’s ruling coalition – would perform poorly in an election, meaning they would not be keen to rush to the polls.
In what is considered a crucial meeting, Ms Livni was scheduled to hold talks with Mr Barak last night.
If Ms Livni succeeds in forming a government, she is expected to continue talks with the Palestinians that began after a US-led summit late last year and she could also move ahead with indirect contacts with Syria, initiated earlier this year by Mr Olmert.
If she is forced to go to an election, Ms Livni’s main rival will likely be former prime minister Benjamin Netanyahu, the leader of the centre-right Likud party, who is much more sceptical about peace moves with the Palestinians and the Syrians.
Opinion polls currently show a tight race between Ms Livni and Mr Netanyahu.