Hounded and harried, Israel's Olmert vows to fight on

JERUSALEM (AFP) — Israeli Prime Minister Ehud Olmert is putting a brave face on an increasingly precarious position as he is hounded by allegations of corruption and his ruling coalition shrinks.

"This could be the end" for Olmert, wrote the daily Maariv as Israel prepared to mark its 60th anniversary and Washington pushes for a Middle East peace deal before President George W. Bush leaves office in eight months.

Fraud squad officers grilled Olmert on Friday in the fifth and latest corruption scandal to dog the premier since he took office in 2006.

The new allegations -- which the mass-circulation Yediot Aharonot reported concerned kickbacks paid by a US businessman before Olmert assumed office -- could be the last straw, the daily said.

Corruption charges "have already robbed the prime minister of the moral authority and respect that should be associated with his office," Yediot Aharonot said.

In a sign of growing pressure, Olmert cancelled the traditional interviews granted ahead of Independence Day "in view of the investigation," Ynet news website correspondent Roni Sofer told AFP.

Olmert dismisses any suggestion that he may be on the ropes, and hit back at what he called a "hysterical" campaign, claiming the media had exaggerated the seriousness of the corruption allegations.

For now a blackout imposed by the judiciary on the nature of the new inquiry has held -- but it has also boosted the element of mystery in the case, feeding the rumour mill.

The police requested an hour-long interview with Olmert following a new development in investigations into corruption claims.

But the authorities would not say why Attorney General Menachem Mazuz took what media said was the unusual step of permitting the premier's "urgent" questioning under caution on Friday.

Leaks, apparently from a police source, indicated that the new allegations that led to the fraud squad interrogation are extremely serious.

"The police are convinced there is firm evidence implicating the head of government," public radio reported on Sunday.

According to the leaks, Friday's questioning of Olmert was linked to a recent police interrogation of his former office manager Shula Zaken, also in connection with corruption claims.

A statement from Olmert's office outlining his view of the new suspicions was banned for publication by a gag order placed on the inquiry.

Citing judicial sources, public television reported that the suspicions of corruption are so strong that Olmert may be forced to step down.

Opposition parliamentarians have called on Olmert to take temporary leave pending the conclusion of the investigations.

"Olmert is the most suspected PM in Israel's history," said Gideon Saar, chairman of the Likud faction.

The premier is already the subject of three police inquiries into suspected corruption involving potential conflicts of interest, fraudulent property transactions and abuse of power in connection with political appointments.

Another case was dismissed.

While the latest development will do little to burnish his image, Olmert has proved he is a survivor, weathering allegations of wrongdoing, calls for his resignation, single-digit approval ratings and harsh criticism for his handling of the 2006 Lebanon war.

As Sunday's weekly cabinet meeting began, Olmert acknowledged that the country had been "awash with rumours over the topic of the investigation.

"I promise that when things are cleared by the authorities they will be put in the right proportion, the correct context, and that will put an end to the rumours," he said.

"Until then, we have a national agenda, I have an agenda as prime minister of Israel, and I intend to keep my agenda."

US Secretary of State Condoleezza Rice is in Jerusalem to spur peace talks between Israel and the Palestinians, and Bush is due in the region on May 13 on a trip that will take in Israel's 60th anniversary celebrations.

Olmert insisted on Sunday the latest investigation would not prevent him from pressing ahead with the talks with Palestinian president Mahmud Abbas.

"We will continue to deal with all the issues on our national agenda and take care of Israel's affairs," he said.

But in another sign of stormy times ahead, three MPs in the ruling coalition announced their defection to a new party formed by Russian Israeli billionaire Arkady Gaydamak, leaving Olmert with the backing of just 64 of the 120 members of parliament.