Israeli Prime Minister Ehud Olmert defied a barrage of calls to resign on Friday after he admitted taking cash from an American businessman at the centre of a police inquiry into allegations of bribery.

Olmert, whose departure could disrupt US-sponsored peace negotiations with the Palestinians, continued with his duties after telling the nation in a late-night address on Israel's 60th Independence Day that he would resign only if the attorney general could produce sufficient evidence to indict him.

The prime minister, who is due to host US President George W. Bush next week, looked relaxed when he addressed Canadian Jewish fundraisers for Israel in Jerusalem on Friday.

He made only an oblique, passing reference to his troubles, saying: "I have enough political issues to deal with here."

Legal sources say police suspect that Olmert took hundreds of thousands of dollars from a New York Jewish financier.

Newspapers freed from a gag order on the investigation splashed lengthy coverage of an affair that broke as Israelis celebrated the 60th anniversary of the state's founding - although some questioned the strength of the prosecutors' case after a series of other inquiries that failed to indict the premier.

"It is doubtful Olmert can survive," wrote Nahum Barnea, a senior columnist for Yedioth Ahronoth.

Olmert has defended himself against a handful of other inquiries since he became prime minister in 2006.

The right-wing opposition Likud party, which Olmert once represented before bolting to the new, centrist group Kadima, is keen for a snap election that opinion polls suggest it and its leader Benjamin Netanyahu could dominate:

"Olmert and the Kadima government have no public legitimacy, no moral legitimacy," said Likud lawmaker Yuval Steinitz.

A key figure will be Defense Minister Ehud Barak, leader of Olmert's main coalition ally the Labour party. Barak has so far said little and is believed to be wary of bolting the alliance if that led to an election that would favor Netanyahu.

Agencies

(China Daily 05/10/2008 page11)