JERUSALEM, Oct 26: Israeli Foreign Minister Tzipi Livni called for snap elections on Sunday after failing to form a new government, dashing faint hopes of reaching a peace deal with the Palestinians in 2008.

“I could have stood here today and presented a government. I was ready to pay a certain price... but I wasn’t ready to mortgage the future of Israel,” Livni told reporters after meeting President Shimon Peres.

“I have informed the president that under the existing conditions we should go to elections without delay. Let the people elect their leaders.” Livni’s announcement came one month after Peres had appointed her to try to form a government to replace Prime Minister Ehud Olmert, who resigned amid corruption allegations and police calls for him to be indicted.

Her efforts collapsed after the ultra-Orthodox Shas party said on Friday it would not join the government because of her refusal to accept its budgetary demands and to pledge not to discuss Jerusalem with the Palestinians.

“When it turned out that everyone was taking advantage of this opportunity to make illegitimate demands, both financial and regarding the peace process, I decided to stop all this and go for elections,” Livni said earlier on Sunday.

The call for snap elections extends the country’s political limbo for at least another three months and could lead to the demise of the already stalled US-backed Middle East peace process relaunched last November.

Both Olmert and Palestinian president Mahmud Abbas had pledged to try to reach a deal before US President George Bush leaves office in January, but despite months of negotiations, the talks have made little visible progress.

A senior aide to Livni said the talks would continue but that it was unlikely any agreement would be reached under the present circumstances.

“Our contacts with the Palestinians will continue but it will be very difficult to make crucial decisions under these conditions,” the official said.

“We must wait for the political reality to become clearer.” An official in Olmert’s office said the outgoing premier would continue to meet with Abbas in a bid to make “as much progress as possible.” But Olmert told the cabinet that when he opens parliament’s winter session Monday he will not discuss issues on which there are “serious disagreements among the Israeli public.” “(Such issues) will continue to top the national agenda but... in current circumstances, I do not think it proper for me to discuss them,” he said.

Palestinian officials close to the peace talks have insisted that Israel’s political turmoil is an “internal matter” and that they hope to continue negotiations with whomever succeeds Olmert.

“We do not want to make peace with one faction in Israel... We want peace with all Israelis,” senior Palestinian negotiator Saeb Erakat said.

Recent polls indicate that the right-wing Likud party under the leadership of hawkish former prime minister Benjamin Netanyahu would emerge as the winner of the elections, with Livni’s centrist Kadima coming in second place. Likud MP Yuval Steinitz said that he welcomed Livni’s decision.

“We are sure we will win the elections and afterwards we will form a broad unity government which will be able to face the economic crisis and the security threats from Iran and (the Islamist Palestinian movement) Hamas.”

It nevertheless remained unclear if new elections, the fifth in less than 10 years, would allow a single party to form a stable coalition in the country’s fractured 120-member parliament.—AFP