The head of the Israeli Defense Forces, Air Force General Dan Halutz has resigned. Israel's Prime Minister Ehud Olmert accepted the resignation just hours after Israel's state prosecutor ordered a criminal investigation into Mr. Olmert's role in the privatization of a leading Israeli bank two years ago. VOA's Jim Teeple has more from our Jerusalem bureau.

Israeli army Chief of Staff Lt. Gen. Dan Halutz speaks at a briefing for Israeli military correspondents in Tel Aviv, 2 Jan. 2007

After months of mounting criticism of his leadership during Israel's war in Lebanon last summer, Israel's Defense Forces Chief Dan Halutz said he was leaving his post. Just two weeks ago, Halutz said he would not resign until the results of an official inquiry into the conduct of the war known as the Winograd Commission were published. Israeli media reports say the commission is expected to single out Halutz for mismanaging aspects of the conflict.

Shlomo Brum, a retired Air Force General who served on the planning branch of Israel's General Staff, says Halutz had lost the confidence of his colleagues in the military, despite Israel emerging from the war relatively unscathed.

"There is some feeling that the war was mismanaged in spite of the fact that eventually the important objectives of the war were achieved. But they could have been achieved in a shorter war and with less damage and casualties," he said.

Israeli armoured vehicles parked at a temporary military staging area along the Israel-Lebanon border (File photo)

Israel launched a major aerial bombing campaign in Lebanon after Hezbollah militants crossed into Israel and kidnapped two Israeli soldiers on July 12, killing a number of others in the operation.

However Israel's air force failed to knock out Hezbollah rocket launchers and Israel's ground campaign became bogged down in southern Lebanon. In a recent military inquiry into the conduct of the war, General Halutz admitted to major failures - saying the air campaign failed and the ground campaign should have been launched earlier. After 34 days of fighting, a U.N. brokered ceasefire went into effect, and about 10,000 U.N. peacekeepers now monitor the border region assisted by Lebanese army troops. Hezbollah militants have largely left the border region and have stopped attacks against Israel.

Israeli PM Ehud Olmert

Israel's Prime Minister Ehud Olmert who had asked General Halutz not to resign said he accepted the resignation with regret .

The resignation came just hours after Israel's state prosecutor ordered an investigation into Mr. Olmert's role in the privatization of Israel's second largest bank, when he was the country's finance minister in 2005. Mr. Olmert has denied any impropriety or illegal conduct in the matter, but the investigation is just the latest in a series of probes of alleged misdeeds centering on the Olmert government, including on the prime minister.

Shlomo Brum says Israel's military has learned its lessons from its recent war in Lebanon, but the political lessons of the war have yet to be resolved.

"On the political level the accumulation of the perceived failure in the war and I emphasize perceived failure because I think the eventually the objectives of the war were achieved. But the accumulation of this perceived failure with other problems that our political system has, creates a general atmosphere of mistrust of the political system, and that is not so healthy to a democratic state," he said.

A poll released last week shows that Mr. Olmert's popularity, and the popularity of his Kadima party has plummeted since the war ended. According to the poll, only 14 percent of Israelis approve of Mr. Olmert's performance and just 10 percent approve of the performance of his defense minister and coalition partner, Amir Peretz, who heads the Labor Party. The poll says that Kadima would lose two-thirds of its seats if an election were held today.