If Barak agrees to join a government under her leadership, he will be made "a full partner," Livni said in private conversations on Sunday.
Livni, who is expected to be handed the task of forming a new government by President Shimon Peres on Monday, told associates that despite her sometimes strained relations with the Labor leader in the past, she believes they should set aside their differences for the sake of the country. "After all, Barak is someone who cares about the nation's welfare," one associate quoted her as saying, a few hours before she and Barak began a late-night negotiating session.
Livni and her aides said they did not know whether Barak would agree to join a government with her as prime minister, but they did not think the Labor leader was in any hurry to hold new elections.
Regarding the terms under which a new coalition government will be formed, Livni's aides said she is willing to drop her previous demand that the core elements of the existing coalition agreement be preserved. Rather, they said, she is now willing to reach a new agreement with Barak.
However, they refused to discuss whether she would agree to remove Justice Minister Daniel Friedmann from office. Labor has consistently opposed the judicial reforms proposed by Friedmann, which have drawn much criticism from past and present Supreme Court justices.
The foreign minister said that she would try to form a coalition quickly, and if she reached the conclusion that doing so was impossible, she would dissolve the Knesset and call new elections.
Barak, for his part, is expected to demand that Livni publicly pledge that any government she forms will remain in office for at least a year and a half, and not just for a few months. He will also ask Livni to make changes to the 2009 budget recently approved by the cabinet, even before a coalition agreement is signed.
Meanwhile, Livni is also trying to cope with the political turmoil in her own party ¬ namely, Shaul Mofaz's announcement that he is taking a time-out from public life following his narrow loss to the foreign minister in last week's Kadima leadership primary. Mofaz's acrimonious departure leaves a vacuum in the party, which has already lost many of its founding fathers (former prime minister Ariel Sharon, Peres, Prof. Uriel Reichman), a mere three years after its formation.
Another notable Kadima member who has been considering retirement is Vice Premier Haim Ramon, who is a close personal friend of outgoing Prime Minister Ehud Olmert. Livni plans to meet with Ramon on Monday and try to convince him not to retire from politics.
Last Friday, Ramon urged Livni not to insist that Olmert resign immediately, telling her it would be better for the party if coalition talks were held while he was still in office. Speaking off the record, other party members said on Sunday that Ramon was right, and Livni is already getting bogged down in the negotiations - a situation they said could have been avoided.
Livni had hoped that, bolstered by a sweeping primary victory, she would be able to form a new coalition easily. Instead, she beat Mofaz by only a few hundred votes, leaving her in a much weaker opening position. Her hope of persuading Olmert to declare himself temporarily incapacitated, which would have automatically made her acting premier for 100 days, also fell through.
Now, therefore, she will need to make budgetary concessions to Labor and Shas to form a new government, while also trying to thwart a deal between Barak and Likud leader Benjamin Netanyahu.
Olmert submits resignation to Peres
"You must have had a hard day," Peres told Olmert upon his arrival at the President's Residence, as they embraced. The outgoing prime minister responded that he actually felt just fine.
Olmert submitted the terse, two-sentence resignation letter to the president, then read it aloud: "Mr. President, in accordance with the instructions of Article 19 of the Basic Law: The Government, after informing the government that I had planned to do so, I hereby submit to you my resignation from the position of prime minister."
Olmert and Peres conversed for several minutes, then the prime minister left the residence.
Immediately thereafter, Peres read a statement to the assembled media. "I respect the dignified manner in which [Olmert] is transferring authority," he said. "This is not an easy decision, and I am sure it was not a simple thing for him to do."
Peres also thanked the outgoing prime minister "for his service to the nation and state during many years of public activity, as mayor of Jerusalem, government minister and prime minister."
"Israel's security and the well-being of its citizens stood at the center of the prime minister's activity," Peres said.
The president then spoke of his intention to begin meeting immediately with the heads of various Knesset factions in order to set a date for forming a new government.
Peres and Olmert were expected to begin formulating a timetable for Olmert's gradual departure from office, but that process may be delayed as the president is leaving late today for New York, where he will attend the United Nations General Assembly.
"Israel faces serious, complex challenges to its security, economy and society. All of these demand continuity of leadership," Peres said.
"Israel is a strong, democratic country, and the replacement of prime ministers will not compromise its strength, its determination to protect its citizens or its pursuit of peace," he added.
Olmert made the final decision to tender his resignation to Peres only on Sunday morning, ahead of the weekly cabinet meeting.
The outgoing prime minister told ministers that after his resignation, he would do everything possible to help Livni assemble a new government.
After the meeting, Olmert continued with his usual schedule of appointments. He held an hour-long meeting with Defense Minister Ehud Barak and two additional security briefings.
At 6 P.M., he arrived at Livni's office for a meeting which Olmert staffers described as "excellent." He then traveled to the President's Residence to hand in his resignation and spent the evening with his family at home.
Although Livni is now head of Kadima, she does not automatically become prime minister: Peres has to first appoint her to put together a governing coalition, which is expected to do. Livni will then have six weeks to form a new government. Should she fail, new elections will be called for early 2009, a year and a half ahead of schedule.
Olmert's associates said that he intends to serve as head of a caretaker government until an alternative government is formed or elections are held. The sources said that as a caretaker prime minister, Olmert intends to continue pursuing negotiations with the Palestinian Authority. Should a peace deal be drafted, he would submit its terms for the review of the Knesset and cabinet.