ANALYSIS: Israel elections hurl peace process deeper into uncertainty

Jerusalem - Israel's election campaign was only minutes old, and former premier Benjamin Netanyahu of the hardline Likud party returned to his pet theme that his opponent will divide Jerusalem. As opposition leader he had the opportunity to fire the starting shot of election campaigning in Israel when called to address the opening of the Knesset winter session, shortly after President Shimon Peres formally announced the early poll late Monday. 'We will not negotiate on Jerusalem, the capital of the Jewish people of 3,000 years. I haven't done so in the past, and we commit ourselves not to do so in the future,' Netanyahu told the Israeli parliament. Israeli Foreign Minister Tzipi Livni, his main contender as the head of Israel's ruling, centrist Kadima party, refused to make such a commitment in her negotiations with the ultra-Orthodox Shas party. It was that refusal, along with her refusal to spend more money on child allowances for large, mainly ultra-Orthodox, families that prompted Shas to reject her offer to join the coalition she was trying to form. Its rejection spelled the end of her efforts and paved the way for the early poll, expected to take place either on February 10 or 17, a year and a month ahead of schedule. The peace negotiations with the Palestinians (and with the Syrians) are only one of several key issues expected to dominate campaigning in the coming months. With many Israelis feeling exasperated with the Middle East conflict, other issues that affect them more directly - not least the global economic crisis, the corruption allegations plaguing Israel's political elite and 'the Iranian nuclear threat' - are likely to feature higher on their agenda. The upcoming poll is nevertheless crucial for the peace process, throwing it into even bigger uncertainty. If Netanyahu is elected, this will likely mean years more of stagnation. If Livni is elected, this would not mean an automatic breakthrough, but negotiations could continue as they have so far. Livni, although no outspoken dove, is a fervent supporter of a two-state solution to the conflict. As Israel's chief negotiator, she has over the past year held dozens of meetings with chief Palestinian negotiator Ahmed Qureia. In the meantime, Ehud Olmert, who resigned from the Israeli premiership last month to fight corruption allegations, has vowed to continue his efforts to reach some sort of written 'understanding' with the Palestinians so long as he heads a transitional government which will be in place until a new one is formed after the elections. But Qureia said that Olmert's and Palestinian President Mahmoud Abbas' stated goal of reaching a peace deal by the end of the year was becoming increasingly unlikely. 'Israel is on the eve of elections, and the Palestinians have an internal problem which we hope will be resolved soon with Egyptian help,' the senior Abbas aide told a conference near Tel Aviv late Monday. He was referring to the dispute between the radical Islamic Hamas movement ruling Gaza and Abbas, whose four-year term as president expires January 9, but who wants to postpone his departure so as to allow simultaneous presidential and legislative elections by 2010. And the Israeli Ha'aretz daily wrote in an editorial Tuesday that it was doubtful whether Olmert as a caretaker prime minister had the legitimacy to sign any deal with either the Palestinians or the Syrians, even if it opined that 'Olmert believes in his ability to reach agreements on both fronts.' If Olmert reaches no deal, as commentators widely predict, the peace process will be left to either Livni, 50, or Netanyahu, 59. Their statements of the past few days reflect their deep differences of approach and opinion. During her campaign for the September 17 Kadima primary, Livni remained mum on such sensitive negotiating issues as Jerusalem, hoping to attract as broad a support base as possible and avoid alienating the centre-right. But her negotiations with Shas drove her into a corner and forced her to state, in a television interview Sunday night, that she was unable to sign a coalition deal ruling out negotiations on Jerusalem because that would 'block every possibility for hope and peace in the state of Israel' and place her at the head of a 'paralysed cabinet.' Her statement would indicate that Livni understands that for the Palestinians - in the words of Qureia Monday - 'there can be no peace without Jerusalem.' But it also exposes her to attacks by the hawkish Netanyahu, who has in the past often used this most emotive of issues to score points with the electorate. While Netanyahu will undoubtedly play the 'She will divide Jerusalem card,' Livni for her part is expected to campaign on her image as the 'Ms Clean' of Israeli politics, promising a new style of leadership. First polls meanwhile predict a neck to neck race, currently giving Livni a slight edge over Netanyahu.