At the start of 2007, it seemed that war would cost Israeli Prime Minister Ehud Olmert his job. As he completed the year, still in office, the greatest threat to him staying there now seems to be the prospect of peace.

Olmert is possibly the least popular prime minister Israel has had. At least that's what the opinion polls reveal. But he will no doubt be happier with his scores at the end of 2007 -- they are at least in double figures -- than at the beginning of the year when they were in single digits. That was because of the impact of the military campaign he launched in Lebanon in the summer of 2006 and which the Israeli public feel he badly mismanaged.

An interim report on the government's handling of the war, published in late April, appeared to be the final nail in Olmert's short career as prime minister (he entered office in May 2006). The report accused him of "a serious failure in exercising judgement, responsibility and prudence."

Its conclusions were damning. "The prime minister made up his mind hastily, despite the fact that no detailed military plan was submitted to him, and without asking for one," the report stated, relating to the decision to go to war. "He made his decision without systematic consultation with others, especially outside the IDF (Israeli Defence Forces), despite not having experience in external-political and military affairs."

There were calls from politicians and from the media for him to quit. But the one person who could have delivered the killer blow -- foreign minister Tzipi Livni, the number two in Olmert's ruling centrist Kadima (Forward) party -- hesitated at the crucial moment. She called on the prime minister to resign, but said she had no plans to do the same, if he did not.

He didn't, her moment had come and gone, and Olmert was left to soldier on. He was helped by the fact that none of the parties in his ruling coalition were keen to go back to the polls just a year after they had been there, and so there was little pressure on him to resign from within the government.

Not that his popularity improved. A series of corruption scandals with which he was linked and which were investigated by the police, further tarnished his image. In fact, so low was his public standing, that in March Olmert resorted to what appeared to be some creative spin, publicly conceding the public's lowly opinion of him.

"I'm an unpopular prime minister, the polls say so," he said. "I think they are right, I am indeed an unpopular prime minister."

But at the same time, he vowed to stick around. "Even though some think this is hunting season, I am sorry to disappoint my detractors, but I am here to work," he said. "I intend to be working for you for a long time yet."

Come June, Israel's intense focus on the Lebanon war was diverted as Hamas militants went on the offensive in Gaza, violently subduing the more moderate Fatah party of Palestinian President Mahmoud Abbas. After winning the election in early 2006, Hamas entered into a power-sharing arrangement with Fatah, but that crumbled in Gaza and Hamas forces routed their Fatah counterparts in the space of a few days, grabbing control of the coastal strip. The West Bank remained under Fatah control.

Olmert's immediate response was to call on the international community to boycott the Hamas rulers in Gaza. His call, to a large extent, was heeded, as most western countries adopted his conditions for lifting a diplomatic embargo on Hamas. The Islamic movement would have to recognise Israel, renounce violence and accept all previous peace accords between Israel and the Palestinians. In September, the Israeli government defined the Hamas-led Gaza Strip as an "enemy entity."

Olmert also adopted a policy of trying to punish the radicals -- Hamas -- and reward the moderates -- Abbas and Fatah. As a result, when hundreds of Palestinian security prisoners were released during the second half of the year, they were almost all Fatah members and almost all from the West Bank. In November, Israel also began to reduce fuel supplies to Gaza. But Israel's refusal to lift stifling travel restrictions in the West Bank, where Abbas is in control, in the form of dozens of roadblocks, did little to bolster the Palestinian leader.

The year, however, was to end with a peace conference and an agreement by the two sides to return to the negotiating table for the first time in seven years. After weeks of wrangling over a joint declaration of principles, Olmert and Abbas met in Annapolis, Maryland, with President Bush acting as the go-between, and declared that they would make every effort to reach a comprehensive peace agreement by the end of 2008, before the U.S. leader left office.

But almost immediately on his arrival back in Israel, Olmert was pouring doubt on what appeared to be a highly ambitious deadline. "An effort will be made to hold accelerated negotiations with the hope that it will be possible to conclude them in 2008, but there is certainly no commitment to rigid timetables regarding these negotiations," the prime minister told his Cabinet after returning from Annapolis in early December.

The statement was seen by many as a signal to the more hardline members of Olmert's ruling coalition, who oppose making concessions to the Palestinians, that he is not in a hurry to cut a deal. Both the rightist Yisrael Beiteinu (Israel Our Home) and the ultra-Orthodox Shas party have warned Olmert that they will bolt the coalition if he agrees to negotiate the core issues at the heart of the conflict, like the borders of a future Palestinian state, the status of Jerusalem, the fate of Palestinian refugees and of the settlements in the West Bank.

If Olmert began 2007 worried that his handling of the Lebanon war might curtail his term in the Prime Minister's Office, he ended the year wondering how far he could push negotiations with the Palestinians before his ruling coalition unravels and he is forced to go to elections.