As expected, Ehud Olmert stated yesterday at the start of the cabinet meeting that, "I have an agenda as prime minister of Israel, I intend to carry out this agenda, and continue conducting the meetings and performing the tasks I have to do." In other words, he intends to continue the agenda according to which part of his time is spent with investigators and lawyers, and the rest with Mahmoud Abbas and Condoleezza Rice. The State of Israel is confronted with questions of war and peace, the relationship between business and government, issues of society and welfare, and all the while it is led by a person who spends a great deal more time with police officers than in meetings with a number of his ministers, and who, had he not been a VIP, would be spending all his time in the interview rooms of the National Fraud Squad.

It is doubtful whether a democracy with "normal" problems would be able to function with a serial criminal suspect at the top of its government. It is no less doubtful that a "normal" person could perform in a reasonable manner, when his mind is preoccupied by the investigation being conducted against him. The public-political, security and economic functions of the prime minister leave him without even a week to deal with the private issues that burden him. Even more so in a country that has to deal with challenges that can be termed existential. Serious people, including important figures from the left who met recently with Olmert, got the impression that the prime minister is aware of the rapid deterioration in the standing of the pragmatists in the territories, of the growing Iranian hegemony in the Middle East, and of the short period left in the Bush administration. To some he said that, as early as the Knesset's summer recess, he intends to present to the public a framework for final-settlement agreements on two tracks - the Palestinian and the Syrian.

Formally, the prime minister is innocent until proven otherwise and retains all his authority. The minute the investigators left his home, he was entitled - he was obliged - to make decisions on every issue placed on his desk. For example, the adoption of the hudna and the Shalit deal, versus the occupation of the Gaza Strip and risking the life of the abducted soldier. But in a state that claims to be a model democracy, formal authority is not enough. In order to decide on a serious diplomatic issue, not to mention a military operation that involves risking people's lives, a leader requires moral authority.

Even before the news of the investigation and the new suspicions against Olmert, the prime minister was suspected of linking his diplomatic moves to his own survival. The lack of clarity surrounding the current investigation is only feeding the rumors and further eroding the trust the public places in a leader who is the subject of so many police-issued warnings. The damage caused by the "untouchable" Ariel Sharon, and the unilateral withdrawal from the Gaza Strip, is still fresh in the collective memory.

Many months separate the start of a criminal investigation against a senior public figure and a decision by the attorney general on whether to file charges or close the case. The residents of Sderot do not need to spend Israel's 60th Independence Day in reinforced rooms, and the residents of the Gaza Strip do not need to sit in the dark because Olmert is finding it difficult to decide how to act on the cease-fire agreement that Egypt has cobbled together after hard work with the Palestinian groups. They do not need to wait for the Knesset to decide to disband the plenum and set a date for new elections.

According to all surveys (even before the newest investigation broke), early elections would allow Benjamin Netanyahu to set up a coalition with Avigdor Lieberman, Effi Eitam and Arcadi Gaydamak. But besides the possibilities of allowing a prime minister under police warning - a PM who has lost the public's trust - to hold on to his seat, or go to early elections that will bury the fragile negotiations with the Palestinians, there is another option: Upon the dissolution of the government, the president could assign Deputy Prime Minister and Foreign Minister Tzipi Livni the task of forming a new government.

Livni has made a name for herself as a clean and responsible politician. She is commited to the things she said last July at a Jerusalem conference - that every day that passes delays the two-state solution and endangers the existence of Israel as a Jewish democracy. Once, after the release of the Winograd Committee's interim report, Livni rescinded her demand that Olmert step down and wasted a significant part of her reputation. If the deputy prime minister bows her head once more, she will become just another small politician. This time, her colleagues in Kadima and her partners in Labor are not entitled to leave her on her own.