Ehud Olmert's announcement on Wednesday night to cede leadership in September could spur a party shake-up and a shakier peace process.
The surprise announcement, made in an televised address to the nation on Wednesday evening from his residence in Jerusalem, is likely to ratchet up the calls for early elections – and throw peace talks with the Palestinians and the Syrians off kilter for at least the next two months.
"The moment has arrived for me to make a decision," Mr. Olmert said. "The smear campaign being waged against me these days has raised a question that I cannot and will not avoid. What is more important: my private justice or the public good?"
After about 2-1/2 years in office, the announcement shifts attention to Foreign Minister Tzippi Livni and Transportation Minister Shaul Mofaz, the two leading candidates in the Kadima Party leadership battle. Analysts say it's not clear that they'll be able hold together the ruling coalition.
The decision is in the hands of about 70,000 registered members of the centrist party, set up in 2005 by former Prime Minister Ariel Sharon. Polls which once favored Ms. Livni seem to be shifting toward Mr. Mofaz, a former army chief of staff, who some analysts say is backed by Olmert.