KEY POINTS:
Embarrassing. That was as far as the Prime Minister was willing to go when pressed on Winston Peters' volte-face on the $100,000 donation from expatriate billionaire Owen Glenn.
She meant embarrassing for Peters - not her. But the tone of her other remarks yesterday indicate she is acutely conscious that Peters' embarrassment could quickly become Labour's embarrassment by dint of his party's support arrangement with her minority Government.
Knowing National will try to exploit that connection when Parliament resumes today after a two-week recess, the Prime Minister is already performing verbal contortions which have her defending Peters while simultaneously distancing herself from the NZ First leader.
Clark refused to speculate on whether Peters had breached Parliament's rules by failing to disclose the Glenn donation in the MPs' register of interests.
But she volunteered the possibility that the Auditor-General might exercise his right to investigate whether Peters had complied with the register's disclosure requirements.
She then declared she had seen no evidence to suggest Peters had failed to meet the "highest ethical standards" required of ministers as laid down by the Cabinet Manual. As to whether he should stay Foreign Minister, he had performed the role "with integrity".
However, when questioned on the credibility of Peters' statements about the Glenn donation, she repeatedly said she had "to take an honourable member at his word".
That effectively gives her an escape clause should Peters later be found to have known more about the donation than he has said he did.
For her own sake - and to get National off her back - Clark must be sorely tempted to give Peters some frank advice on his handling of the revelation that Glenn had made a donation when Peters had repeatedly insisted he had not.
But Clark's reluctance to criticise Peters is understandable. Her caution is driven by a combination of political necessity and loyalty to Peters.
Were political pressure to force Clark to sack Peters and he pulled his party's support, her minority Government could conceivably topple and she might have to call an early election. That is unlikely to happen because the Greens, the Maori Party plus the two independent MPs, Taito Phillip Field and Gordon Copeland, could give Labour sufficient votes to cling to power until Parliament rises in September.
But Clark could not guarantee that support and would not want to place herself in a position where she could not rely on getting it. That was essentially the fate of the Muldoon Government in 1984. It would similarly be the kiss of death for Labour in 2008.
Less hypothetical is the likelihood that Labour will need NZ First's continued backing to have any chance of forming the next Government.
That is reason enough not to upset Peters. But Labour also owes Peters for his siding with Labour, especially in Parliament and often when he has been under no obligation to do so. Loyalty is a two-way street in politics. Peters has been the model support partner, much less critical of Labour than United Future's Peter Dunne, the Government's other bulwark on confidence and Budget motions.
The crucial difference is that Peters and trouble have a fatal attraction. At some point, they were bound to make a date with each other.
Now that has happened, Clark - unable to sack him and anyway unwilling to do so - may be lumbered with a Foreign Minister who goes into this weekend's meetings with US Secretary of State, Condoleezza Rice, facing investigation by both the Auditor-General and Parliament's privileges committee.
In short, not a good look.
