Plagued by allegations of corruption and criticism of weak leadership, the Israeli Prime Minister Ehud Olmert has finally bowed to media, political and judicial pressure and announced his intention to resign as a prime minister once his party, Kadima, has elected a new leader in September.

He cited national and family interests, as well as his determination to clear his name of the stigma of financial corruption for which he has been under investigation. Olmert denies any wrong doing by accepting financial donations, in cash and favours, from an Israeli-American Jewish businessman, Morris Talansky. However, his surprise decision will not only sow confusion in the Israeli political scene but will certainly throw the Middle East peace process, Israeli-Palestinian direct negotiations and US President George W. Bush's pledge to achieve peace before the end of this year into uncertainty.

The Palestinian National Authority and its president, Mahmoud Abbas, had pinned their hopes on a "weak" Olmert, who was battered in South Lebanon in July 2006, to snatch what was promising to be an historic settlement of the 60-year-long bloody Palestinian (Arab)-Israeli (Jewish) conflict. Olmert's decision will leave everyone guessing: whether Foreign Minster Tzipi Livni, who admitted a few days ago that she worked for the Israeli Intelligent Service (Mossad), or Transport (and former defence) Minister Shaul Mofaz, will succeed him, or even whether his successor will be able to form a government coalition. A possible general election could open the door for Benjamin Netanyahu, the leader of the right-wing Likud Party to take power as the polls suggest.

Whatever the outcome, the biggest loser and victim is the Middle East process and the Palestinians. The other losers include the US presidential policy and all those who bargained that the Annapolis conference would provide an impetus for peace.