Israeli President Shimon Peres yesterday formally declared early parliamentary elections after a failure of cabinet formation, which means outgoing Israeli Prime Minister Ehud Olmert will remain in power as caretaker premier for several months.

Peres informed the decision to Knesset (parliament) Speaker Dalia Itzik during the opening of the Knesset winter session in late Monday afternoon, according to local daily the Jerusalem Post.

Peres told Itzik that the country would be holding elections after it became clear that none of the Knesset factions were capable of building a coalition.

Earlier Monday, the president met Knesset faction representatives and they all told him that they supported holding elections as soon as possible, except the GIL Pensioners Party which urged him to delay the vote.

Peres' declaration came one day after Israeli Foreign Minister Tzipi Livni, who is also ruling Kadima chairwoman, announced on Sunday that she failed to form a coalition government and called for early general elections.

Following Peres' announcement, Knesset has up to three weeks to dissolve itself and set an election date, widely expected to be scheduled for nest January or February.

During his speech, Peres presented the Knesset with five questions he considered imperative for parties to answer before running for representation in Israel's political system.

First on the president's list was the question of national security. Peres asked his audience to dwell on how they could ensure national security when considering all of the threats facing Israel.

The president then asked parties to consider their role in the Israeli-Arab conflict, insisting that the 2002 Saudi Peace Initiative was a huge step in distancing the Arab world from a concrete policy of rejecting Israel's existence.

Most of the Arab leaders he has met with were "unwilling to fall in line with Iranian President Mahmoud Ahmadinejad's imperialist approach to Islam," said Peres, adding that Egyptian President Hossni Mubarak had made it clear that "a peace deal with the Palestinians will inevitably lead to a larger peace agreement in the Middle East."

The other three questions Peres presented to the lawmakers concern Israel's economic needs in wake of the international financial crisis, the importance of solidarity in Israeli society and the role of Israel's youth, which he considered "the future of the state."

OLMERT TO REMAIN IN POWER FOR SEVERAL MONTHS

Ever since Olmert's September resignation went into effect and with it, the automatic resignation of his government, Olmert, who has been enveloped in a series of corruption and fraud scandals, has been in charge of a caretaker government.

After Peres' Monday declaration of early parliamentary elections, Olmert's caretaker government will continue to remain in power for several months until a new government is formed and wins the support of a Knesset majority.

Speaking after Peres, Olmert congratulated Livni on her efforts to form a coalition, saying, "I am sorry for the circumstances which determined that the coalition negotiations would be unsuccessful...I had hoped that a new government would be formed by the person who was voted in from Kadima."

Olmert reminded the assembled lawmakers and guests that the country would not be coming to a standstill in the coming months of campaigning.

"Friends, members of Knesset (MKs)," he said, "even if the MKs stop their parliamentary lives for a few months, the interests of the state are not frozen...There are still challenges in the realm of defense."

The outgoing prime minister cited Palestinian terrorism and the Iranian threat as two such challenges, saying that "the leaders of Iran do not cease in their preparation of weapons of destruction while we are preparing for elections...I recommend that they do not test us."

Turning to the family members of captured Israeli soldier Gilad Shalit, who were present in the plenum, Olmert took the opportunity to reiterate that he was still acting incessantly in an effort to bring about Gilad's release, though insisting that he could not divulge the nature of his effort.

The remainder of Olmert's speech was devoted to the international financial crisis and the challenges facing Israel's economy. The prime minister praised the country's financial robustness, insisting that "Israel's coping with the crisis began in the years leading up to it, with a series of steps taken that allowed the Shekel to become one of the strongest currencies in the world."

However, it is no secret that the crisis can also harm Israel's economy if Israel does not take careful measures, added Olmert.