As Israel turns 60, probe threatens prime minister

Prime Minister Ehud Olmert in March 2006
Prime Minister Ehud Olmert in March 2006 Barbara Davidson / Dallas Morning News / MCT

JERUSALEM — Israeli jets flying in acrobatic formation soared over Jerusalem's ancient city walls on Tuesday as the nation geared up to celebrate its 60th anniversary later this week.

But the country's attention has been diverted unexpectedly by an unfolding political scandal that threatens to bring down Israeli Prime Minister Ehud Olmert and undermine his fragile peace talks with the Palestinians.

Israeli prosecutors are aggressively pursuing new allegations involving an American businessman's financial ties to Olmert while he was the mayor of Jerusalem in the late 1990s and the early part of this decade, according to Israeli government officials.

The details remain unclear because Israel's courts have imposed a gag order on the case.

That hasn't prevented some facts from seeping out.

On Wednesday, a judge allowed journalists in Israel to report that the courts have been asked to approve a special, urgent deposition of a "foreign national."

The New York Post reported that the man at the center of the case is Moshe "Morris" Talansky, a 75-year-old New York investor who was dubbed "The Laundry Man" in financial logs kept by one of Olmert's most loyal aides.

Talansky, The Post reported, is suspected of passing cash to Olmert in the late 1990s.

The prime minister's office said Friday that police investigators had questioned Olmert for an hour about his ties to an American citizen who offered financial support while Olmert was running for mayor of Jerusalem and in Likud Party primaries in 1999 and 2001.

Talansky couldn't be reached for comment via phone or e-mail. His daughter-in-law and one of his grandsons declined Monday to comment on the case to McClatchy.

On the eve of Israel's Memorial Day, which precedes the independence celebration by a day, Israeli prosecutors asked the judge on Tuesday to keep details secret.

"Nobody wants to hear such things on a national day of mourning," Iris Barak, an Israeli police spokeswoman, told a reporter for Israel's Haaretz newspaper.

The gag order is expected to remain in place as Israel celebrates 60 years of independence on Thursday.

Even without the details, the case is casting a pall over the extended festivities, which will include a visit next week from President Bush.

"We would have wanted Israel's 60th anniversary celebrations to be held in a different, more exciting atmosphere, without 'severe evidence' against the prime minister, without a mounting Iranian existential threat, without that gloomy feeling — which is vague but nonetheless part of the consensus — that something isn't quite right," wrote Israel Hayom reporter Hemi Shalev.

Olmert has tried to ignore the investigation and focus on his job.

On Sunday, he dismissed much of the speculation about the case as "wicked and malicious" rumors that wouldn't distract him from his work.

In a speech Tuesday to Keren Hayesod, Israel's main international fundraising group, Olmert focused on his nation's triumphs.

"The people of Israel are strong," Olmert said. "The state of Israel is strong. There is no enemy that can destroy us."

But Olmert's political adversaries are intent on using the latest investigation to bring down the prime minister's shaky coalition government.

"I think this is the beginning of the end for Mr. Olmert," said Shmuel Sandler, a senior research associate at Bar-Ilan University's Begin-Sadat Center for Strategic Studies.

While four older investigations of Olmert have failed to lead to any charges against Olmert, Sandler said this one may prove fatal.

"It is like heart attacks," he said. "A person can survive the first, second, third. But, ultimately, there are too many."

Last fall, Israeli police urged prosecutors to end one of the investigations into Olmert's role as finance minister in the sale of the state-owned Bank Leumi. But three other investigations, including one looking into allegations that Olmert got a sweetheart deal in the sale of a Jerusalem home, continue.

Should Olmert be forced from office, it would inevitably undermine Israel's peace talks with the Palestinians and make it ever more difficult for the two sides to work out any kind of deal before Bush leaves office in about eight months. Olmert's likely successor, Labor Foreign Minister Tzipi Livni, has been closely involved in the peace process. But as prime minister, she would have to govern with a razor-thin majority in the Knesset, limiting her ability to reach a deal.

But there's no certainty about Olmert's future. Since taking office two years ago, Olmert has survived repeated attempts to bring down his coalition government.

"It appears to be more serious," said Yossi Alpher, a veteran analyst and co-founder of the political Web site. "But Olmert's a tough guy and a very tough political maneuver. I think it's too early to tell."

(Researcher Tish Wells contributed.)