Israeli PM hits back over corruption claims

JERUSALEM - Prime Minister Ariel Sharon, facing a funding scandal that is eroding his lead in the approaching election, has vowed to defend himself against corruption allegations he calls "political libel".

At the same time, the Israeli Army said soldiers killed a gunman who infiltrated Israeli-held territory from Syria and Palestinian witnesses said Israeli troops shot dead two Palestinians in the West Bank and Gaza Strip.

In his first comments since reports surfaced on Wednesday of alleged financial irregularities in his 1999 Likud Party election campaign, which include accusations that he received a US$1.5 million ($2.8 million) loan from a South African businessman, Sharon said he was being targeted by a smear campaign aimed at toppling him from power.

"This is a despicable political libel and I will refute this libel with documents and with facts," he said.

A poll published on the Ha'aretz newspaper's website found the scandal had sent Likud's support plummeting, predicting only a narrow win for the right-wing party which would make it difficult for Sharon to form a stable coalition government.

The poll predicted only 27 seats for Likud, down from an estimated 41, and a rise for the Labour Party, predicted to net 24 seats instead of 21 in the January 28 general election.

The scandal gathered steam after Israel drew British anger and muted United States criticism for barring Palestinians from attending talks in London as part of its response to a double suicide bombing on Sunday that killed 22 people in Tel Aviv.

British Prime Minister Tony Blair said he would keep up pressure on Israel to reconsider its travel ban on Palestinians he had invited to peace talks.

- REUTERS

Herald feature: The Middle East