- The Washington Times - Sunday, April 22, 2007

TEL AVIV — Finance Minister Abraham Hirchson took a leave of absence yesterday in the face of an expected fraud indictment, marking the latest corruption scandal weighing down the Israeli government.

Coupled with public criticism of the handling of last year’s war in Lebanon, the controversies surrounding Prime Minister Ehud Olmert and his allies have spurred talk of new elections barely a year after the government entered office.

The departure of Mr. Hirchson — a close political ally of Mr. Olmert’s — also could spur infighting within the prime minister’s party, Kadima, which polls show would lose more than half of its 29 seats in parliament in any new election.

“There are symptoms of a critical mass” of scandals and investigations, said Rina Matzliach, the political commentator for Israel’s Channel 2 news. “It could very well be that this is creating an atmosphere in which [political parties] will reach an agreed-upon date for elections.”

Five members of the Olmert Cabinet — including the prime minister — now face or have endured corruption investigations, and another three coalition legislators have come under similar scrutiny.

The Hirchson scandal also leaves the Israeli treasury without a leader at a sensitive time for the prime minister.

In just a few days, Mr. Olmert’s government is expected to come under harsh criticism from a panel commissioned by the prime minister to look into his government’s performance during its inconclusive monthlong war against Hezbollah.

So deep is the disillusionment with Mr. Olmert that he is likely to be disparaged no matter what the panel’s conclusions.

If the panel’s reproach of the prime minister is abrasive enough, it will encourage some politicians to demand that he step down. But if the conclusions seem to absolve Mr. Olmert of responsibility for the war’s failures, critics will dismiss the monthslong inquiry as a whitewash.

“The X factor is, ‘What is this panel’s conclusion about the management of the government last summer?’ ” said David Makovsky, a fellow at the U.S.-based Washington Institute for Near East Policy. “This could be the death knell of the government.”

Mr. Hirchson’s woes came to a head as Israeli press and broadcast outlets reported over the weekend that the Israeli police think enough evidence is available to indict him on charges that he embezzled money as chairman of a public-sector labor union.

Israel Radio reported that police also are looking into suspicions that Mr. Hirchson received free medical treatment as the chairman of a government-run health maintenance organization.

Mr. Olmert is facing an inquiry into charges that during a stint as finance minister he changed the terms of a bank privatization plan to help one of the bidders. He also is being investigated over a series of real estate deals in which he profited from sales prices that sharply deviated from going rates in the market.

The political turmoil has spurred press reports that Mr. Olmert’s rivals within Kadima — such as Foreign Minister Tzippi Livni — are privately speaking of the need to start preparing for a scenario in which the prime minister would have to step down.

Kadima parliament members were on the defensive yesterday.

“The political forces in our party are united,” said party member Ze’ev Boim, “and all the efforts to look for splinters within the coalition have no foundation in reality.”

Israeli press and broadcast outlets reported that the prime minister pushed Mr. Hirchson to step aside temporarily. The finance minister’s leave of absence will last three months, though Mr. Olmert is thought to be eyeing a Cabinet shake-up within that period.

Mr. Makovsky said that if Mr. Olmert can survive the report on the Lebanon war, he may be able to resurrect his government with new appointments to top Cabinet positions such as the finance and defense ministries.

“The immediate sense is of a tightening of the noose around Olmert,” he said, “but given the vagaries of Middle Eastern politics, crisis sometimes creates opportunity.”

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