Israeli Prime Minister Ehud Olmert is trying desperately to salvage what remains of his tattered reputation in a last ditch bid to achieve some success on the Palestinian-Israeli front before he steps down as premier in the next couple of weeks.

Last week he underwent his seventh interrogation in the last few months by Israeli police on allegations of fraud and accepting bribes.

However, Olmert failed on Sunday to persuade Palestinian President Mahmoud Abbas, or Abu Mazen as he is better known, and chief Palestinian negotiator Saeb Erekat to accept an agreement of principles within a general framework for a two-state solution.

Following an unusually short meeting of less than an hour, an unimpressed Erekat emerged stating, "We want an agreement to end the occupation and establish an independent Palestinian state with Jerusalem as its capital," he told The Associated Press.

"President Abbas told Olmert that we will not be part of an interim or shelf agreement," he said. "Either we agree on all issues, or no agreement at all."

And both the Egyptians and the Jordanians support Abbas' stand. Egypt is afraid that a partial solution to the Palestinian-Israeli conflict will further destabilize the region, while Jordan fears being swamped by thousands of Palestinian refugees in the event of failed negotiations.

The Palestinians assert that Israel is continuing to dance around the core issues which include East Jerusalem, the return of the refugees, the final borders of a Palestinian state and continued settlement building.

They further accuse Israel of establishing facts on the ground in order to make the final resolution of these core issues even more difficult.

Last month Israel published tenders for the construction of 1,761 illegal housing units for Israeli settlers in East Jerusalem alone according to the Israeli rights group, Peace Now.

Meanwhile, faint hopes for a peace breakthrough on the Syrian front appear possible. Syrian President Bashar Assad said Wednesday that direct talks with Israel were feasible, but that Syria would wait for the arbitration of a new American administration.

To date Syria has been holding indirect talks with the Jewish state through the mediation of Turkey.

However, Syria has simultaneously been exploiting Russia's deteriorating relations with the West, Israel in particular, over the Georgian debacle, and Israel's arming and training of Georgia's military, by visiting the Kremlin in an attempt to purchase some upgraded military hardware.

Jerusalem views this move as making Syria more of a military threat to Israel. Compounding this is Russia's possible sale of its S-300 anti-aircraft missile system to Syrian ally, and Israel's arch-enemy, Iran.

But while tensions between Israel and it regional enemies have heated up, Israel's ruling Kadima party is facing internal power balances and shifting alliances of its own.

Most favored to take over when Olmert steps down shortly is Foreign Minister Tzipi Livni, who is regarded as clean against a background of successive Israeli governments stained with corruption allegations through the decades.

Although she is an unknown and critics have questioned her strength and lack of military experience in a country which idolizes its military and from which many Israeli leaders have emerged, she is regarded as having leadership qualities and a no-nonsense approach.

Her closest rival is Iranian-born transportation minister Shaul Mofaz, a rather dour personality who is considered out of touch with the public. However, in an effort to improve his public credibility, Mofaz has recently been seen working the streets and mixing with the hoi polloi.

Mofaz has, however, accused Livni of being soft on security and inexperienced militarily and has tried to woo the Israeli public over by continually criticizing Livni's initial hesitance to go to war with Lebanon in 2006.

Livni was also partially responsible for the implementation of U.N. Security Council Resolution 1701 which brought the 34-day war to an end. Mofaz claims that this prevented Israel from delivering a final devastating blow to Shiite resistance movement Hezbollah.

Mofaz has also used Hezbollah's growing military and political strength since the war to back up his claim.

Livni's response has been an attempt to break Mofaz's stronghold on Israel's fourth largest city, Rishon Lezion, which has 6 000 registered Kadima members, more than any other Israeli city.

Her campaign staff have prepared a detailed list over the last few days of every key Kadima activist in the city -- most of whom currently support Mofaz.

Meanwhile, former head of domestic intelligence agency, the Shin Bet, and current Public Security Minister Avi Dichter, another contender for the Kadima leadership, has weighed into the fray by attacking both Mofaz and Livni and accusing them both of incompetency.

"I won't rain verbal bombs on Iran and cause oil prices to spike, and I won't ignore the road map for peace, and I won't search for irresponsible solutions in the form of shelf agreements with the Palestinians," Dichter said, speaking at a campaign rally in Herzliya.

Livni doesn't appear too concerned about Dichter. However the leader of the opposition Likud party, the belligerent, ambitious and hawkish Benjamin Netanyahu has been offered a seat in any future coalition of Livni's in an attempt to neutralize him.

Finally, Defense Minister Ehud Barak, is not considered a serious challenge to Livni. He does not have control even over his party's 19 Knesset members and the bitterness toward him within his party's top ranks is increasing.

In public opinion polls about the prime ministerial candidates, he finds himself trailing Netanyahu, and several members of his Knesset faction stated that "if he keeps tumbling in the polls, we will replace him before the elections."