EDITORIAL: Inside Tel Aviv

As Israel considers the danger posed by an Iranian nuclear weapon and the terrorist threats on its borders, the country faces a growing internal crisis that has the potential to end Ehud Olmert’s tenure as prime minister. Mr. Olmert is facing a money-laundering investigation. Public opinion suggests that Israelis want Mr. Olmert to resign.

Morris Talansky, a millionaire philanthropist from Long Island, N.Y., testified in an Israeli courtroom Tuesday that he gave Mr. Olmert $150,000 in cash-stuffed envelopes during a a 13-year period dating back to Mr. Olmert’s tenure as mayor of Jerusalem. Mr. Olmert does not deny receiving the money, but says it consisted of legitimate campaign contributions and was not used to bribe him.

Police and prosecutors are currently investigating the timing of the payments to see whether Mr. Olmert performed any official favors for Mr. Talansky in exchange for the money.

Mr. Olmert says he has no intention to resign unless he is indicted. But a poll released yesterday found that 70 percent of Israelis want him to go. Also, Defense Minister Ehud Barak, who is also leader of the Labor Party, the main partner in Mr. Olmert’s center-left political coalition, urged the prime minister to step aside. And Foreign Minister Tzipi Livni, a member of Mr. Olmert’s Kadima Party, called on him to resign. Mr. Olmert was elected March 28, 2006, and the next national elections are not scheduled to occur before 2010. If the Olmert government fails, they could occur much sooner.

The tenuous situation allows several scenarios. Mr. Barak could bring down the center-left coalition government headed by Mr. Olmert by withdrawing Labor from its coalition with Kadima, although he has not done so yet. That is because polls suggest that former Prime Minister Benjamin Netanyahu, leader of the hawkish Likud Party, would win. Since Mr. Barak became Labor Party leader last year, he has fallen in the polls (in large part because he failed to stop the rockets fired into Israel from Hamas-controlled Gaza).

Earlier this month, a Labor Party leader outlined a cynical plan of action for Ha’aretz newspaper: Labor would stand aside if Mr. Olmert resigns, allowing Mrs. Livni to succeed him on an interim basis. Then, they would wait for her to fail: “We all know she’ll buckle under the pressure, that she lacks skills.” Under this scenario, Labor would allow the country to collapse and then ride to Israel’s rescue. Neither Kadima nor Labor Party leaders have exactly distinguished themselves in handling Israel’s affairs of state.