JERUSALEM - Prime Minister Ehud Olmert suffered another blow Thursday when a key rival for power in his political party suggested the embattled leader should be replaced because of a widening corruption investigation.
With the comments from Foreign Minister Tzipi Livni, Olmert now encounters an open rebellion in his Kadima party, making it increasingly unlikely he can survive the public uproar that has gripped the country since a key witness described illicit cash payments to the luxury-loving Israeli leader.
Livni's comments came a day after Ehud Barak, the powerful defense minister, called for Olmert to go and threatened to pull his Labor Party, a key coalition partner, out of the government and force new elections if he didn't comply.
Livni, one of Israel's most popular politicians, suggested a change of leadership was required to maintain the party's dignity, becoming the first senior party member to openly come out against Olmert.
"I think the reality has changed since yesterday and Kadima has to make decisions," Livni told reporters. "I suspect that Kadima needs to start right away acting for every eventuality, including elections."
Olmert has faced considerable public pressure to resign since U.S. businessman Morris Talansky testified in court this week that he handed Olmert $150,000 over the years, in addition to unspecified sums from other donors. Olmert insisted on getting the money in cash, and used it to help finance his penchant for high-living, including luxury hotels and first-class travel, Talansky testified.
Olmert has weathered a string of scandals since he took office two years ago and has vowed to fight the latest accusations. His lawyers are set to cross-examine Talansky on July 17.
Olmert has denied any wrongdoing and said he would resign only if he is indicted. But he may not last that long.
"Politically, he is finished. Now it's just a matter of time," said political analyst Hanan Crystal.
Olmert has a reputation as a savvy politician and has dodged all five other investigations into his affairs since he was elected two years ago. Crystal doubted he'd survive this one, calling the Talansky testimony a "smoking gun," and said the only question was what would force Olmert out first - the investigation or new elections.
A general election is set for late 2010, but if Olmert loses his parliamentary majority, it could be called earlier.
Polls indicate that if elections were held today with Olmert heading his party, hard-line opposition leader Benjamin Netanyahu would easily sweep to power. Therefore, Livni and Barak would prefer to depose Olmert without going to a national ballot just yet.
Last year, Livni called on Olmert to resign after a government investigation slammed his handling of Israel's war in Lebanon in 2006. She was criticized by politicians and the media for not following through by resigning. Barak likewise never carried out a threat to force Olmert out after the report.
But on Thursday, Livni and Barak raised the stakes.
"The die has been cast," Barak told a meeting of his Labor Party in Tel Aviv. "We should prepare for elections. ... In my estimation we are going to elections, it could be before the end of this year."
The speech resembled a campaign rally, as Barak, a former army chief and prime minister, spoke of the nation's security challenges and the military backgrounds of Labor Party leaders.
Livni said she favored holding a party primary. "In this way, we can operate to restore the trust in Kadima," she said, without mentioning Olmert by name.
Opinion polls show Livni to be the party's most popular politician with the public but she faces stiff competition inside the party. Internal Security Minister Avi Dichter said Thursday he would seek the leadership and two other ministers, Shaul Mofaz and Meir Sheetrit, are also expected to join the fray.
Political analyst Yaron Dekel said the constitution of the young party, formed in 2006 by former Prime Minister Ariel Sharon, had no specific formula for ousting a sitting leader.
"In Kadima, it is very hard to replace the prime minister - the party leader - there is no set procedure for his dismissal," he told Channel 1 TV.
Olmert has not commented publicly about Talansky's testimony and has tried to maintain a business-as-usual appearance.
On Thursday, he hosted the Danish prime minister, and his office released a busy schedule of events for next week, including a trip to Washington to meet President Bush.
The Justice Ministry said investigators are speeding up their corruption inquiry to try to conclude the case. Prosecutors are looking into possible bribery, campaign funding violations and money-laundering.
"There is an overriding public interest to wind this thing up quickly," Justice Ministry spokesman Moshe Cohen said. "This is not a regular investigation."
The outcome of this latest political crisis could have a profound effect on the fate of Israel's peacemaking with the Palestinians, and on talks with Syria, recently relaunched after breaking down eight years ago.
Washington has been prodding Israel and the Palestinians to try to conclude a blueprint for a peace deal by the end of Bush's term in January.
White House press secretary Dana Perino said Olmert's political trouble "obviously takes up some oxygen" when it comes to negotiating Mideast peace, but that it's a matter of internal Israeli politics.
The State Department declined to speculate on the possible effect of a change in leadership in Israel on the U.S.-backed peace process.
Palestinian President Mahmoud Abbas has said he considers the matter an internal Israeli issue. But his aides have said they are worried about the effect Olmert's woes will have on peacemaking.
Turkey-mediated talks with Syria were only disclosed last week, and there has been no comment from Damascus on Olmert's troubles.