May 30, 2008	Friday	Jamadi-ul-Awwal 24, 1429

JERUSALEM: The political crisis threatening to topple Israeli Prime Minister Ehud Olmert and to trigger new elections has dimmed chances of a peace accord this year, Israeli, Palestinian and Western officials said.

The turmoil comes at what may be the worst possible time for the Bush administration, which sees the few months remaining before the US presidential election in November as the narrow window for reaching a deal on Palestinian statehood.

Olmert has so far defied a demand by his main coalition partner, Defence Minister Ehud Barak’s left-leaning Labour Party, to leave office over allegations he took envelopes stuffed with cash from a Jewish-American businessman. Olmert and the businessman have denied wrongdoing.

Israeli officials close to Olmert, speaking on condition of anonymity, said his strategy will be to try to push ahead with peace negotiations as if nothing has changed and hope that the corruption investigation does not end in charges against him.

But amid the political uncertainty, Olmert could have even less room to manoeuvre in terms of both the final-status negotiations and in meeting US demands that he ease travel and trade restrictions for Palestinians in the occupied West Bank.

“It can’t go on as usual,” said a senior Israeli official.

Other Israeli officials described some of the negotiators as distraught and paralysed by the uncertainty.

Palestinian negotiator Saeb Erekat called the crisis an “internal Israeli matter”, but said his side was worried about the future of the talks launched in November.

“VERY BAD TIME”: A senior European diplomat close to the talks said the turmoil comes at a “very bad time”, undermining chances that Barak, as defence minister and with an eye to elections, will be willing to take risks, like removing roadblocks and checkpoints to boost the standing of Palestinian President Mahmoud Abbas.

“We are heading in a direction where it will be far more difficult to get things done,” said the diplomat, who has been working with Barak and the Palestinians on the checkpoint issue.

Israeli officials said Foreign Minister Tzipi Livni will continue to meet regularly with her Palestinian counterpart. The officials said indirect negotiations with Syria would resume after Olmert returns on June 6 from a visit to Washington.

“The meetings will continue, but to make concessions you need a strong government. A looming election makes this government weak,” said a senior Israeli official.

Another senior Israeli official compared both the Palestinian and Syrian tracks to riding a stationary bicycle.

While talks with the Palestinians will continue, decision-making will be “put on hold” until spring 2009, dashing Washington’s timetable for a deal before Bush leaves office in January, the official added.—Reuters