Olmert faces new test with Lebanon war report

By Alastair Macdonald and Dan Williams

JERUSALEM (Reuters) - Israeli Prime Minister Ehud Olmert can expect a storm of criticism on Wednesday when an inquiry delivers its final report on the 2006 war in Lebanon.

But though rivals have been quietly jostling for position in case he resigns, possibly even triggering a snap election, many believe he can survive the fallout, just as he did when the government-appointed Winograd Commission slammed his conduct of the war in an interim report nine months ago.

The report will come out at 6 p.m. (1600 GMT) on Wednesday.

Though unpopular in polls and having already lost allies from his fractious coalition this month, Olmert has made clear he wants to stay in power and lacks an obvious challenger.

"One thing is clear -- the current situation is inestimably better than in the past," he said last week of the Lebanon border area. "For a year and a half, there has been quiet."

He also has an influential prop in U.S. President George W. Bush, whose hopes for an Israeli-Palestinian peace deal during his final year in the White House would almost certainly be destroyed if Israel turned inward to fight an early election in which right-winger Benjamin Netanyahu would start as favorite.

Olmert insists he has already acted to implement the panel's early recommendations. Israel's army chief and defense minister already paid with their jobs last year for what many saw as a debacle against Hezbollah in Lebanon after the guerrillas seized two Israeli soldiers and killed eight in border clashes.

The Commission cannot deliver recommendations that Olmert or others should resign, although the prime minister can expect harsh words from the five panel members at a news conference.