Temperature rises on a long summer of discontent.

SEASONED ANALYSTS ARE questioning the feasibility of a future for the Israeli government as its leader, Prime Minister Ehud Olmert, faces his fifth round of corruption investigations in two years.

Should Olmert be indicted it is likely that even with his reputation as a survivor and skilled politician, he will have to resign. If that happens, the coalition government he heads would be in danger of collapse.

At the same time political pundits have been looking at the bigger picture and debating Israel's future a decade down the line, particularly with regard to its relations with its neighbours, Syria and Iran.

Lawmakers from across the Israeli political spectrum called for Olmert's resignation, and fresh elections, moments after it emerged that the prime minister is suspected of illegally receiving hundreds of thousands of dollars from an American businessman and fundraiser Morris Talansky.

The case centres on Talansky, who allegedly transferred the money to Olmert during his tenure as the mayor of Jerusalem for a decade, beginning in 1993 through to his appointment as trade minister in 2003.

The police's national fraud unit questioned witnesses in the case, along with other suspects, such as Olmert's former bureau chief Shula Zaken, whose testimony was called upon for the third time. Zaken had previously refused to cooperate with police and was placed under house arrest.

When the story first broke, Israel's Channel 1 quoted a senior legal source as saying, "Olmert is in a grave situation. It is doubtful whether he will be able to continue to hold his position."

Labor Party officials confirmed their faction would remain in Olmert's coalition government until a court ruling was made in regard to the allegations. However, some members from Ohnert's ruling Kadima Party openly stated it would be difficult for them to be supportive of the prime minister considering the gravity of the allegations against him.

Meanwhile, Hamas' leadership is keen to secure a temporary ceasefire or tadahiya and has threatened to step up attacks on Israel on an unprecedented scale if a ceasefire is not reached. Casualties and one death had already been reported before the first few days of June were out with Hamas claiming responsibility.

Israel has warned that the current situation-vis-a-vis Gaza will not continue, and the long-threatened and extensive ground invasion of Gaza does appear closer, especially after Olmert got the green light for such a military incursion during President Bush's most recent visit to Jerusalem.

While the brouhaha surrounding the future of Olmert's coalition is temporary, Israel could possibly face major crises on an unprecedented scale 10 years down the line.

Dr Samir Awad, the chairman of the Faculty of Law & Public Administration at Birzeit University's Political Science Department on the West Bank, believes Israel's refusal to address the root causes of the Palestinian conflict, preferring instead to manage the situation with a band aid approach is one that will backfire badly for the Jewish state.

"Israel will continue its short-term strategy of managing the issue instead of a long-term strategy of trying to resolve the situation," he told The Middle East.

"Israel is not addressing the core issues of Palestinian grievances, such as the division of Jerusalem, the right of return of the refugees and ceasing settlement building on the West Bank, seriously. Israel is now 60-years-old and it is time to consider the long term implications of its policies in an adult fashion. They are no longer kids.

"This strategy could lead to the strengthening of Hamas in the West Bank, accompanied by the weakening of the PA and a revolt of the people against the leadership of President Mahmoud Abbas for failing to deliver on core Palestinian demands. This is what Israel will have to contend with," Awad warned.

However, Dr Moshe Ma'oz, an Israeli Professor Emeritus of Islamic and Middle Eastern Studies at the Hebrew University in Jerusalem, and Senior Fellow at the Harry S. Truman Research Institute for the Advancement of Peace, sees two scenarios developing.

"Israel must choose between peace with its neighbours, according to UN resolutions and international law, or face the consequences of major military upheaval and confrontations," he told The Middle East.

But reconciliation will require urgent and serious intervention from an American administration prepared to lean, not only on the Palestinians, but also on Israel to ensure that it abides by international law and these resolutions, he added.

Ma'oz says it is imperative that Israel talk to Hamas, arguing that the Islamic organisation is not a threat militarily and would agree to a ceasefire--which Israel has so far declined, fearing the militants will use the time to strengthen and rearm.

But, Ma'oz says, Israel will always outpower Hamas militarily, given that it will remain impossible for the organisation to smuggle tanks and aircraft into Gaza. Awad says the possibility of Israel and Hamas living as neighbours, tolerating each other but refusing to recognise the legitimacy of the other, is not an outlandish concept.

Furthermore, neither Ma'oz nor Awad believe Iran is an existential threat to Israel's existence unless it is attacked first.

"Iran could close the Strait of Hormuz and threaten oil supplies to the West as leverage without having to resort to nuclear weapons that would ensure mutual destruction," opined Ma'oz.

The key to a diplomatic breakthrough is seen to be a weakening of Iran's influence through its proxies in the region. Syria's ties to the Shi'a crescent of Iran, Hizbullah and possibly the Shi'as of Iraq, could be broken if there was serious intervention by the Americans in regard to pressuring Israel to return the Golan Heights.

"Syria uses this alliance to strengthen its hand politically against the regional hegemony of a Sunni leadership comprising Egypt, Jordan, part of the Lebanese government, and the Gulf states, as well as being a way of pressuring Israel to return annexed land," stated Ma'oz.

He explained that weakening this crescent was certainly possible since although the countries of the crescent had some common interests, there are also significant differences, based on national interests as opposed to the establishment of a new Islamic caliphate.

Awad concurred, saying part of an arrangement for peace might include Israel establishing quiet on its northern borders by reaching a deal with Hizbullah, another Syrian and Iranian proxy. This would involve a comprehensive prisoner swap and the return of the Shaba' farms, since the Israelis have no ideological or land ties to Lebanon, he noted.

But the danger remains in the US being more interested in the Sunni alliance exerting pressure on Syria than coaxing the latter away from the Shi'a, headed by Iran, added Awad, as well as Washington failing to pressure Israel to make real concessions to the Palestinians.

This danger is further compounded by a new Palestinian revolt financed and militarily supported by Iran and its proxies should the Israelis not seriously address legitimate Palestinian grievances over water, settlement and refugees issues in the West Bank.

RELATED ARTICLE:

This development could also effectively torpedo current peace talks between Palestinian President Mahmoud Abbas' Palestinian Authority (PA) and the Israeli government, as political attention focuses on the latest internal crisis facing the Jewish state rather than on furthering the implementation of the Road Map and understandings reached at the Annapolis peace talks last year.

Palestinian negotiator Saeb Erekat said the PA was following developments in the probe very carefully, while US Secretary of State Condoleezza Rice, expressed her concern during her recent visit to Israel, saying Olmert's ability to move forward in regard to peace negotiations could be seriously hampered by the police investigation.

Palestinian Prime Minister Salam Fayyad and the head of the PA's negotiating team Ahmed Qureia have concluded that if the allegations against Olmert are founded, then negotiations could grind to a halt, leaving Hamas the only group to benefit from the situation.

By Mel Frykberg in East Jerusalem