Olmert's party faces "Titanic" moment over probe

By Adam Entous - Analysis

JERUSALEM (Reuters) - Israeli Prime Minister Ehud Olmert's colleagues are considering their options should he resign over a bribery scandal, political sources said on Friday.

Foreign Minister Tzipi Livni, Olmert's deputy in the centrist Kadima party, could take over as interim leader if Olmert quits -- as he says he will if prosecutors indict him.

But Olmert is one of the great survivors of Israeli politics. And a range of other scenarios offer opportunities and risks -- not just for Israelis but also for the Palestinians and U.S. officials struggling to secure a peace deal between them.

"Everybody is checking to see if they have a place on the lifeboat before the Titanic sinks," said a former adviser to Olmert, who spoke on condition of anonymity. "If the Titanic goes down, we don't want to go down with it."

Among those who might favor a handover to Livni is President George W. Bush, whose hopes for a deal on founding a Palestinian state before he leaves the White House in January would be dashed if Israel held an early parliamentary election.

Bush is to meet Olmert on Wednesday when he visits Israel to mark the 60th anniversary of the founding of the Jewish state.

Kadima, or "Forward" in Hebrew, was formed in 2005 by then prime minister Ariel Sharon, when he, Olmert, Livni and others quit the right-wing Likud and joined rebels from left-wing Labor. Olmert took over when a stroke left Sharon in a coma but sources say the party barely functions as cohesive unit.

To hold on to power, Olmert depends on rival parties within his fragile coalition, chief among them Ehud Barak's Labor.