Defence minister demands Israeli Premier step down

JERUSALEM (AFP) - Israeli Defence Minister Ehud Barak on Wednesday demanded that embattled Prime Minister Ehud Olmert quit promptly over corruption allegations or face early elections.

"I think the prime minister has to disconnect himself from the day-to-day running of the state," said Barak, who heads the Labour party, a key ally in the government coalition.

"I don't mind if he suspends himself, takes leave or resigns," said Barak, himself a former premier.

"Unless (Olmert's centrist party) Kadima acts and a new government that we support is formed in parliament we will work to decide on a new agreed early date for elections."

Barak made the remarks one day after a wealthy US financier testified before a Jerusalem court that he gave Olmert vast amounts of cash to fund his political ambitions and perhaps his lifestyle.

"I don't think that the prime minister can simultaneously run the government and take care of his personal affairs," Barak said.

Olmert has denied allegations of wrongdoing.

But now that even his coalition partners have taken the gloves off, his political future appears increasingly uncertain.

Should the 17 Labour MPs quit the coalition, the government, which currently has 67 seats in the 120-member Knesset, would lose its parliamentary majority.

The premier also faced pressure from leftist parties even though in the past they have supported governments involved in the peace process.

"I am fully in favour of negotiations with Palestinians and Syria, but Olmert cannot from a moral point of view carry out such discussions following the damaging testimony by Morris Talansky," said Ran Cohen of the Meretz party.

But the premier's public relations advisor Tal Silberstein told army radio: "The prime minister does not intend to step down."

The affair gained momentum after Morris Talansky, a wealthy Jewish-American businessman, testified at a Jerusalem court on Tuesday that he gave Olmert 150,000 dollars. Several members of Olmert's Kadima party have already let it be known they would be willing to accept the prime minister's job, including Foreign Minister Tzipi Livni, Transport Minister Shaul Mofaz and Internal Security Minister Avi Dichter.

Olmert has been questioned twice by anti-fraud squad officers investigating the corruption claims.

While he denied the allegations, he said he would quit if indicted.

Olmert who was mayor of Jerusalem and trade minister before becoming premier in 2006, is the subject of three more police inquiries into suspected corruption involving potential conflicts of interest, fraudulent property transactions and abuse of power in connection with political appointments.