Ex-Israeli PM Ehud Olmert acquitted on key charges

(AP) JERUSALEM - Former Prime Minister Ehud Olmert's acquittal of the most serious charges in a high-profile corruption case on Tuesday set off a fierce debate about how the peace process might have proceeded differently had the former leader not been driven from office three years ago.

Olmert has claimed he was on the brink of a historic agreement with the Palestinians when he was forced to resign in early 2009. His departure cleared the way for hard-liner Benjamin Netanyahu's election, and peace efforts have been at a standstill ever since.

Palestinian President Mahmoud Abbas called Olmert on Tuesday afternoon to congratulate him on the acquittal, said Nimr Hamad, an Abbas adviser.

"There is no doubt that a great opportunity was wasted with the absence of Olmert. There had been huge progress on all core issues ... and the Palestinian and Israeli positions were getting very close on all issues. Unfortunately, that's all gone now," Hamad said.

Olmert, who headed the centrist Kadima Party, stepped down after he was charged with a series of crimes that included accepting cash-stuffed envelopes from an American supporter and double billing Jewish organizations to cover overseas travel. The alleged crimes took place while Olmert was mayor of Jerusalem and a Cabinet minister, before he became prime minister.

On Tuesday, a Jerusalem court dismissed most of the allegations, convicting him only on a lesser charge of breach of trust for steering job appointments and contracts to clients of a business partner. The verdict was seen as a major victory for Olmert, although his legal troubles are far from over. He will be sentenced in September and is currently standing trial in a separate bribery case involving a controversial Jerusalem real estate project.

Casually dressed in a blue button-down shirt, Olmert appeared calm and relieved as the verdict was delivered. As he left the courtroom, the former prime minister, looking pale and thin, had a wide smile and kissed defense lawyers and advisers. Olmert remained free throughout his two-year trial.

"There was no corruption. There was no taking of money. There was no use of money. There were no cash envelopes. There was nothing of what they tried to attribute to me," Olmert told reporters defiantly afterward. He called the lone conviction a "procedural lapse" from which he would draw the necessary lessons.

There is no guarantee that Olmert could have reached peace with the Palestinians at that time. The Palestinians have said that gaps remained. Netanyahu has repeatedly offered to restart negotiations but has turned down a Palestinian condition that he stop construction in Jewish settlements in the West Bank.

Nonetheless, there seemed to be a broad consensus Tuesday that the region would look different if Olmert were still in charge.

"He was in the middle of a significant process, peace process with the Palestinians, with the Syrians, and it all stopped because he had to go," said Olmert's spokesman Jacob Galanti. "Right now, he's very sorry for all those big things that he planned, which didn't happen."

The verdict did not completely wipe the slate clean.

Olmert now has the dubious distinction of being the first Israeli prime minister ever to be convicted of a crime, albeit a minor one. A longtime aide, Shula Zaken, also was convicted in the double billing case, although the court ruled that Olmert was not aware of Zaken's actions and therefore was not responsible.

And the chances of making a political comeback remain remote while he awaits a Sept. 5 sentencing hearing over the breach of trust charge. He faces a minimum of three months of prison or community service and being banned from re-entering politics for seven years to a maximum of three years in jail.

Olmert's lawyer Eli Zohar and Emanuel Gross, a legal analyst at the University of Haifa, said jail time was unlikely.

Aides said Olmert had made no decision about returning to politics.

Still, evening newscasts were filled with debates over whether Olmert had been treated unfairly, and what might have happened with peace efforts had he stayed in office.

State Prosecutor Moshe Lador was heavily criticized for bringing down a sitting prime minster with what turned out to be a weak case.

Yossi Verter, a political commentator for the Haaretz daily, accused Lador of going after Olmert "with froth running from his lips, hatred in his eyes and a considerable degree of boastfulness and condescension."

Lador defended his actions, saying at a press conference that there was sufficient evidence to indict.

At the time of Olmert's departure, Israel and the Palestinians had engaged in more than a year of intense negotiations over the terms of Palestinian independence. The Palestinians seek all of the West Bank and east Jerusalem, in addition to the Gaza Strip, for an independent state. Israel occupied all three areas in the 1967 Mideast war, though it withdrew from Gaza in 2005.

Since leaving office, Olmert has said he presented the Palestinians the most generous Israeli proposal in history, offering roughly 95 percent of the West Bank, along with a land swap covering the remaining 5 percent of territory. In addition, he proposed international administration in east Jerusalem, home to the city's most sensitive religious sites.

Palestinian officials have said that while progress was made, Olmert's assessment was overly optimistic.

In an interview with Israel's Channel 2 TV last weekend, Abbas said progress was made in many key areas, but said he had never accepted Olmert's border proposals. "The land that Olmert offered to me, I wanted other land, we didn't agree to it," he said, apparently referring to the land swaps.

Olmert's term also was marred by repeated controversies, and he was deeply unpopular when he left office so it's difficult to know how much leverage he had to push a deal through.

Under Olmert's watch, an Israeli soldier was captured in a cross-border ambush by Palestinian militants from the Gaza Strip.

Israel also fought an inconclusive monthlong war against Hezbollah guerrillas in Lebanon and launched a bruising three-week military offensive against Gaza militants in late 2008 - an offensive that largely stopped rocket fire from Gaza but exacted from Israel a very significant diplomatic price.

At the time of Olmert's departure, peace talks already were on hold because of Palestinian anger over the Gaza offensive.

Olmert's resignation cleared the way for Netanyahu to lead the hard-line Likud Party back to power. Netanyahu has refused to adopt Olmert's proposals, and serious peace talks have never resumed.

Avraham Diskin, a professor of political science at the Interdisciplinary Center Herzliya college, said the Palestinians had missed a golden opportunity with Olmert. "They could have received a very generous offer," he said.