Israel's foreign minister has edge in party race

JERUSALEM (Reuters) - Israeli Foreign Minister Tzipi Livni has a clear edge in the Kadima party race to replace scandal-hit Ehud Olmert, polls showed on Friday, but officials questioned her ability to form a coalition and become prime minister.

Two of the three polls published in major Israeli newspapers also showed Livni running nearly neck-and-neck with rightist Likud party leader Benjamin Netanyahu should snap parliamentary elections be called.

Olmert threw Israel into political turmoil that could hamstring Middle East peacemaking by announcing on Wednesday that he would stand down as premier after a September 17 Kadima leadership contest.

Israeli police questioned Olmert for three hours on Friday over allegations he took bribes from an American businessman and made duplicate claims for travel expenses when he was trade minister and mayor of Jerusalem. Police plan to question Olmert again in the near future, officials said.

Olmert, who has denied any wrongdoing, would remain caretaker prime minister until his successor builds a new coalition government, a process that could take months.

That will give him some time to continue peace talks with the Palestinians and indirect negotiations with Syria, but politicians and analysts said he would lack the mandate to make commitments that would be honored by his successor.

Polls in all three major newspapers showed Livni, a former intelligence agent, with a wide lead of 8-18 percentage points over her closest Kadima rival, Transport Minister Shaul Mofaz.

EARLY ELECTIONS

Kadima officials questioned the ability of Livni, Israel's chief negotiator with the Palestinians, to build a coalition between the country's fractious parties, increasing the chances of early parliamentary elections.

Mofaz, a former defence chief known for his tough tactics in crushing a Palestinian uprising, may have an easier time winning over the ultra-Orthodox Shas party to secure the 61 seats needed in parliament to form a stable government, they said.

One top Kadima official said he feared the battle to succeed Olmert "will tear Kadima to apart".

Speaking in Washington, Mofaz said peace talks with Syria should continue, without preconditions, after Olmert steps down.

Former prime minister Netanyahu, a vocal critic of Olmert's peace moves, could try to thwart Kadima's plans to form the next government by mustering a majority in parliament, either to form his own coalition or to move up elections scheduled for 2010.

But two surveys published on Friday suggested Netanyahu would face a tighter-than-expected race if Kadima picks Livni as its new leader.

A poll in the mass-circulation Yedioth Ahronoth newspaper showed Netanyahu would win 30 seats over Livni's 29. Left-leaning Haaretz had Livni on 26 seats to Netanyahu's 25.

Maariv showed Netanyahu clearly ahead, with Likud winning 33 seats in Israel's 120-seat parliament, and Kadima taking 20.

Defence Minister Ehud Barak, the Labor Party leader, is widely seen as backing Livni, the most powerful woman in Israeli politics since Prime Minister Golda Meir in the 1970s.

In a statement on Friday, he said Labor would consider joining a new coalition but added: "If we need to go to elections, then we will be ready."

(Additional reporting by Ori Lewis in Jerusalem and Dan Williams in Washington; Editing by Giles Elgood)