Israeli Prime Minister Ariel Sharon clung to life yesterday after a massive stroke that is likely to create a huge vacuum in Israeli politics and the Middle East peace process.

Surgeons said they stemmed the bleeding in the 77-year-old leader?s brain in a seven-hour operation but his condition remained critical in an intensive care unit at Jerusalem?s Hadassah hospital.

A cerebral hemorrhage, or bleeding stroke, felled Sharon on Wednesday in the midst of his fight for re-election on a promise to end conflict with the Palestinians, who lost their own iconic leader, Yasser Arafat, to a brain hemorrhage in November 2004 after weeks of illness.

His deputy, Ehud Olmert, was named acting prime minister. But political analysts said the general election Sharon had been widely expected to win as head of the new centrist Kadima party would become an open race if he died or was incapacitated.

Sharon, seriously overweight and hit by a mild stroke on December 18, was rushed for treatment late on Wednesday from his ranch in southern Israel after complaining he felt unwell.

He has been a dominant figure for decades in shaping the Middle East. The pullout of Israeli soldiers and settlers Sharon completed in the Gaza Strip in September despite right-wing opposition in the Jewish state raised hopes for peacemaking.

Palestinian President Mahmoud Abbas telephoned Sharon?s office to inquire about his health and wish him a speedy recovery, Abbas?s spokesman said.

Deputy Palestinian Prime Minister Nabil Shaath, however, said he did not believe Sharon ever had any faith in the peace process, and that his condition would increase uncertainty over getting back to negotiations.

Battered by Sharon?s harsh measures to fight a five-year-old uprising, militant factions reacted with glee. ?The downfall of the Dracula of the century is a day of happiness for every Palestinian and every Muslim?, Abu Abir, a spokesman for the Popular Resistance Committees, a coalition of militants, said in a statement.

Share prices fall

Israeli assets tumbled on news of Sharon?s condition. The Israeli shekel fell to a one-month low, dropping 1.34 percent to 4.6370 against the dollar at midday, while Tel Aviv shares plunged nearly 6 percent at the open of trade.

Share prices rose more than 30 percent in Israel in 2005, reaching record highs last week. Stocks had been expected to gain further in 2006 with Sharon on course for a third term.

Medical experts agreed the prime minister was unlikely to pull through without his faculties being at least seriously impaired.

?With all due caution, it appears as though the era of Sharon leading Israel has reached its tragic end?, wrote Aluf Ben, Haaretz?s diplomatic correspondent. Yedioth Ahronoth, Israel?s biggest newspaper, summed up Sharon?s situation in a banner headline: The Final Battle.

Popularly known as The Bulldozer, Sharon spent several days in hospital after last month?s ailment but quickly plowed back into a punishing public schedule. He has campaigned on a platform of readiness to give up more occupied land in the West Bank as a way to end decades of conflict, but has vowed to keep Israel?s hold on major settlement blocs.

Bold steps

He founded Kadima after quitting the right-wing Likud in the face of a party rebellion over the Gaza withdrawal that ended 38 years of military rule in the coastal territory.

A large part of Sharon?s popularity among Israelis stems from a belief that he could take bold steps that others would not get away with given his background as the archetypal hawk. But Palestinians have long suspected that Sharon?s plans for ending conflict meant that he would dictate terms that would leave them only fragments of the state they seek.

In Washington, White House national security adviser Stephen Hadley briefed President George W. Bush on Sharon?s condition. Bush, a close ally of Sharon, called him a man of courage and peace and said ?we are praying for his recovery?. He has relied heavily on Sharon as he attempts to coax Israelis and Palestinians into a peace agreement. Hopes for progress in Middle East peacemaking were already dwindling given the possibility of a delay to a January 25 Palestinian election and growing internal unrest in Gaza and the West Bank as well as spurts of Israeli-Palestinian violence.

In a new development, the Palestinian Elections Commission said it had resigned to protest at what it called government interference, in a move that could obstruct the vote.

Jeffrey HELLER

Sharon?s departure casts shadow over peace hopes

Setting off earthquakes is what Israel?s Ariel Sharon has always done best. His final, dramatic disappearance from politics will be no exception.

?There is no-one that can unite the country around the hard decisions that need to be made the way that Sharon could,? said Israeli political analyst Yossi Klein-Levi. Whatever the medical prognosis, the prime minister?s political life appeared to be at an end.

Sharon?s new centrist party Kadima not only lacks any other leader with his record or ability to forge a new political force, it does not even have a list of election candidates. That may have existed nowhere but in Sharon?s head. ?Sharon is Kadima and Kadima is Sharon,? wrote Nadav Eyal of the mass-market Maariv newspaper.

Ehud Olmert, the deputy who has assumed Sharon?s prime ministerial powers, is a career politician who cannot command the same trust in Israel as the former soldier. Other potential successors, Justice Minister Tzipi Livni and Defense Minister Shaul Mofaz, lack solid political bases.

The disarray in Kadima will certainly benefit what remains of Likud, the party now led by right-winger Benjamin Netanyahu after being shredded when Sharon jumped ship in a bid to escape rows with his own party over giving up occupied land. Bibi at least has the credentials of being a former prime minister -- if not a very popular one.

Kadima might benefit from expectations that it would follow Sharon?s path, but Israelis showed a decade ago that they do not vote out of sympathy. Yitzhak Rabin?s Labour was defeated in elections after his 1995 assassination.

?Israeli democracy will know how to deal with the test, as it has known how to deal with it in the past?, wrote Attila Somfalvi of the Ynetnews Web site. ?It?s unclear how Kadima will survive it.?

Biggest winners from Sharon?s departure could be those at the extremes of both Israeli and Palestinian politics -- Jewish ultranationalists who do not want to give up any biblical ground and Islamists who want to destroy Israel.

?With Sharon out of the picture it is hard to imagine anyone with the clout and the will to undertake the extremely difficult task of uprooting tens of thousands of the most hardcore settlers?, said Klein-Levi.

Slim hope for Palestinians

Sharon?s apparent aims still fell far short of the state that Palestinians want on all the West Bank and Gaza Strip with East Jerusalem as a capital. They feared that Sharon, long reviled by Arabs for his role in all Israel?s wars since its creation, would dictate terms leaving them with just fragments of the territory they want.

The question now is whether any other Israeli leader could deliver anything at all. ?The departure of Mr Sharon would be carried most heavily on the shoulders of the Palestinians. The Palestinians had big expectations?, said Palestinian rights activist Bassem Eid.

Failure to deliver progress toward statehood could only further undermine the waning strength of the Palestinian Authority under President Mahmoud Abbas, already struggling with a surge of unrest ahead of a January 25 parliamentary election.

Political analysts said that receding prospects of further Israeli withdrawals increase the danger of re-igniting a Palestinian uprising that was calmed when Sharon and Abbas agreed a ceasefire almost a year ago.

The concentrated effort from Washington that is vital for any meaningful push toward ending conflict is also in severe doubt without Sharon -- given the very personal relationship that he built with Bush.

?I don?t think we?re going to have any efforts for a while,? said Edward Walker, president of the Middle East Institute and a former US ambassador to Israel. ?I don?t see how you can marry up the Palestinians with the Israelis when both are undergoing leadership crises.?

Matthew TOSTEVIN

Ehud Olmert

Acting prime minister Ehud Olmert, aged 60,was first elected in Israel?s Parliament in 1973, at the age of 28. Though he served as a legislator for the right wing Likud in the 1990s, Olmert broke with more hardline faction colleagues by backing a leftist proposal for Palestinian self-rule. He became fast friends with his New York counterpart at the time, Rudolph Giuliani. After joining Sharon?s government, Olmert would often float diplomatic initiatives in the media before the prime minister formally adopted them. He backed Sharon against a rightist rebellion over the Gaza withdrawal, and was among the first to follow the prime minister to form the more centrist Kadima Party. Olmert lives in Jerusalem with his wife, Aliza, an art enthusiast identified with the political far-left. They have four children.

CHRONOLOGY

Israeli leader Ariel Sharon?s career

1948 - Sharon commands infantry company in Israel?s independence war.

1953 - Special army commando "Unit 101" led by Sharon carries out raid into Jordan in which 69 civilians are killed. Raid was reprisal for Palestinian guerrilla attack.

1967 - Sharon commands armoured division as Israel captures West Bank, Gaza Strip, Golan Heights and Sinai in war.

1973 - Sharon recalled from retirement after Arab armies launch surprise attack. Disobeying orders, Sharon?s division crosses Egypt?s Suez Canal.

1977 - Sharon elected to parliament and becomes agriculture minister in Israel?s first right-wing government. Sharon becomes major patron of Jewish settlements.

1982 - As defence minister, Sharon masterminds invasion of Lebanon to root out Palestinian guerrillas. Lebanese Christian allies kill hundreds of Palestinians in refugee camps.Sharon oversees evacuation of Jewish settlers from Sinai for its handover to Egypt under peace treaty.

1983 - Sharon forced to resign after Israeli inquiry finds him indirectly responsible for massacres in Lebanon.

1998 - As foreign minister, Sharon urges Israelis to ?grab as many hilltops as you can? in occupied territory.

Sept. 28, 2000 - Opposition leader Sharon visits flashpoint Jerusalem holy site. Clashes erupt. Palestinians say the visit triggers their uprising. Israel says revolt was already planned.

March 7, 2001 - Sharon takes office as prime minister after defeating Prime Minister Ehud Barak of centre-left Labour.

Jan. 28, 2003 - Sharon, after using tough measures to suppress uprising, re-elected with bigger margin.

Dec. 18, 2003 - Sharon announces ?Disengagement Plan? calling for settlements to be removed. He later says all settlements in Gaza Strip and four in the West Bank will go.

Feb. 8, 2005 - Sharon and Palestinian President Mahmoud Abbas agree ceasefire.

Sept. 12, 2005 - Israel completes withdrawal of troops and settlers from Gaza Strip despite attempts to stop the evacuation by ultranationalists including Likud ?rebels?.

Nov, 21, 2005 - Sharon quits Likud to form new centrist party ahead of early elections.