KEY POINTS:
Ditch Winston Peters or hang tight and risk Labour facing massive collateral damage for keeping him on as a minister.
Those are the bleak choices confronting the Prime Minister following Owen Glenn's explosive testimony to the privileges committee that Peters asked him for a donation towards the latter's legal challenge to the Tauranga result at the 2005 election.
Helen Clark has constantly said that the verdict on Peters would be delivered by the "court of public opinion". By that, she meant the forthcoming general election.
Such are the massive contradictions between Peters' and Glenn's versions of events, however, the court is now very much in session.
There is little question of the verdict. When it comes to deciding who to believe - Peters or Glenn- the public is unlikely to come down on Peters' side.
What reason would Glenn have for not being straight with the privileges committee beyond the far-fetched notion that he has concocted his evidence as revenge for him missing out on becoming New Zealand's consul-general in Monaco.
In contrast to Glenn's openness, it has taken weeks of pressure in Parliament and latterly the privileges committee to extract anything from Peters by way of explanation.
He may well be able to say there are no inconsistencies in his account of events and that Glenn has simply got it wrong or been confused. But Peters lost this public relations battle some time ago and Glenn's evidence puts the seal on it.
The Prime Minister could opt to continue to take Peters at his word. The problem is the public will overwhelmingly take Glenn's.
That puts Clark firmly alongside Peters when she has strenuously sought to keep some distance between her and him.
However, arguing over the fine detail of what happened is essentially irrelevant. The political reality is that Peters' credibility is shot. He is thus no longer credible as a minister.
Clark might well ignore that reality for the sake of political convenience and keeping NZ First sweet. She has so far.
What Clark cannot ignore is whether the Glenn letter is the final straw and public pressure for Peters' dismissal snowballs over coming days to the point where she has to respond or risk her's and Labour's credibility suffering a massive hit.
Clark will be gauging the public mood as she assesses whether she can hang onto Peters for the next few weeks until Parliament rises for the election - the point at which Labour's association with NZ First will effectively go into limbo.
She could stall making a decision on Peters' future as a minister by saying she will wait for the privileges committee to make its report on the question of whether the $100,000 donation should have been declared in the MPs register of pecuniary interests.
That would at least allow Labour to pass the vitally important Emissions Trading Bill while she can still rely on having NZ First's backing.
Alternatively, she could cut her losses by taking the radical option - putting everyone out of their misery and announcing an earlier-than-expected election. That would take some of the steam out of things by signalling that Labour's relationship with NZ First is for all intents and purposes is at an end - at least this side of election day.
