Two corruption investigations, an arrest and a sluggish economy have greatly affected the prime minister's standing.

Mario Canseco

After being named "Man of 2003" in a Shvakim Panorama/Israel Radio survey, Israeli prime minister Ariel Sharon begins his fourth year in office with a low approval rating and a corruption investigation that threatens his administration's future.

Sharon is the subject of two separate probes. The first focuses on an illegal loan supposedly received during his 1999 campaign to become leader of the Likud Party. Prosecutors allege that South African businessman Cyril Kern gave Sharon $1.5 million U.S. to repay a series of illicit contributions.

Kern and Sharon have been close friends since 1948, when the London-born Kern joined the Israeli Army and was placed under Sharon's command. The businessman amassed a fortune after taking over his uncle's clothing company, and relocated to South Africa in 1997.

The controversial story originally broke in the first days of 2003, but had little effect on Israel's general election. Likud secured 38 seats in Parliament, allowing Sharon to remain as head of government.

The second allegation also dates back to 1999, and involves a purported kickback scheme to promote a resort project in Greece. Real estate developer and Sharon family friend David Appel allegedly paid $690,000 U.S. to the prime minister and his son Gilad, requesting their notoriety to encourage interest in his tourism venture.

The scandal took on a whole new meaning on Jan. 21, when Israeli prosecutors filed formal bribery charges against Appel. The indictment also includes Gilad, as Appel is said to have offered Sharon's son a highly-paid position in his company, in case the project materialized.

Deputy prime minister Ehud Olmert—who was Jerusalem's mayor in 1999—is also mentioned in the case file. Israel's justice ministry stated that no charges would be filed against Sharon unless criminal intent can be proven. If Sharon is eventually indicted, existing laws would force him to leave office immediately.

Appel's arrest has swayed views on the "Greek Affair." 49 per cent of respondents to a poll conducted this month by the Dahaf Institute for Yediot Ahronot said Sharon should quit. In a similar survey conducted last August, only 28 per cent of respondents demanded the prime minister's resignation.

Sharon's popularity, boosted by his stance on Palestinian matters during the first six months of 2003, was plummeting even before the indictment. 56 per cent of respondents to a September 2003 Yediot poll were satisfied with the prime minister's performance. The number has also dwindled in surveys conducted for Maariv, from an approval rating of 40 per cent this past October, to a low of 33 per cent last month.

On top of these problems, the Israeli economy has been sluggish. A modest 1.2 per cent Gross Domestic Product (GDP) growth in 2003 has not helped the country's financial situation. The United States government recently reduced loan guarantees to Israel by $289.5 million U.S. The measure is regarded as a result of Israeli policies undertaken in the West Bank, including the construction of a separation barrier, which has provoked severe international and Palestinian criticism.

The opposition Labour Party has openly called for Sharon's resignation, and is preparing a no-confidence motion. Olmert was mentioned as a possible successor, but the field has narrowed down to finance minister Silvan Shalom, and former prime minister and current finance minister Benjamin Netanyahu.

This is not the first time Sharon fights for his political life. In 1983, a government inquiry found him indirectly liable for the deaths of hundreds of Palestinians in Lebanon's refugee camps. Sharon was forced to resign from the defence ministry. This time around, he has vowed to stay until the next parliamentary vote, scheduled for 2007.

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