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JERUSALEM: Israeli President Shimon Peres said on Monday that efforts to form a new government had failed, paving the way for snap elections that could turn on the future of the Middle East peace process.
Peres formally cleared the way for an election by announcing that efforts to set up a government to replace the coalition headed by outgoing Prime Minister Ehud Olmert, who is stepping down to battle corruption allegations, had failed.
"After having consulted with representatives of all parliamentary factions I would like to inform you that I see no possibility of forming a government," Peres said in a letter he delivered to parliament speaker Dalia Itzik.
Lawmakers now have three weeks to agree on a date for the election, after which parliament will be automatically dissolved and a vote held three months later in February 2009.
The governing Kadima party, the left-of-centre Labour and the right-wing Likud were already mapping out the outlines of their political agendas for a campaign that will likely focus on the future of the Middle East peace process.
"We have been in a period of uncertainty for several months and therefore the elections should take place as soon as possible," Foreign Minister and Kadima chairman Tzipi Livni told parliament ahead of Peres' announcement.
Livni said she instructed her party to discuss a date for the vote with other factions after abandoning efforts to form a coalition because she would not cave in to the religious Shas party's conditions.
"I was ready to pay a certain price... but I wasn't ready to mortgage the future of Israel," Livni said after Shas set budgetary conditions and insisted the fate of Jerusalem could not be included in peace talks.
Livni was elected Kadima leader last month to replace the scandal-plagued Olmert, who will remain interim premier until a new government is in place.
Livni made it clear she would maintain Olmert's policies favouring the creation of a Palestinian state alongside Israel but with the Jewish state to retain its major settlements in the West Bank.
Both Israel and the Palestinian had pledged to try to reach a deal before US President George W. Bush leaves office in January, but the talks have made little visible progress.
Palestinian prime minister Salam Fayyad warned that peacemaking was "teetering" because of continued settlement construction and the construction of Israel's controversial separation barrier.
"Time has become more pressing, as far as such a solution is concerned, with every brick added to the settlements, every new road built for the settlers and every stone lengthening the wall," he said.
With Israel going to early elections, peace efforts are now likely to hang in limbo for several months as both sides remain deeply divided on core issues, including the fate of the settlements and the future status of Jerusalem.
Israel considers the whole city its eternal and undivided capital, but the Palestinians have demanded east Jerusalem as the capital of their future state.
Israel captured the mostly Arab sector of the city in the 1967 war and annexed it in a move not recognised by the international community.
Likud, which is headed by hardline former prime minister Benjamin Netanyahu, claims that Kadima and Livni are willing to divide Jerusalem and to withdraw from the West Bank, which Israel calls Judea and Samaria.
"It turns out the Kadima leaders are ready to give up the whole of Judea and Samaria and carry out the programme of the extreme left," Likud parliamentary leader Gideon Saar said.
He insisted Likud would devote itself to maintaining Israel's security interests in the West Bank as well as its "national heritage" - a reference to Jewish settlements rooted in religious and nationalist claims to the land.
A poll published in the Yediot Aharonot newspaper indicated Kadima would win 29 of the 120 parliamentary seats while Likud would get 26 and Labour would win just 11 seats if elections were held now.
A majority of 61 MPs is required to form a government.
Kadima currently has 29 deputies, Labour has 19, while Likud and Shas each have 12. - AFP/de
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