(Updates with Netanyahu, new quotes) By Dan Williams JERUSALEM, Feb 12 (Reuters) - Israeli opposition leader Benjamin Netanyahu accused Prime Minister Ehud Olmert on Monday of allowing Hamas to consolidate its Palestinian power-base and erode a Western embargo aimed at prodding it into peace talks. The broadside by Netanyahu, an ex-premier who has made no secret of hopes to retake top office, came after Hamas signed an alliance with the more moderate Fatah faction that Palestinians hope will make their government fully acceptable abroad. "In his stammering weakness and confusion, the prime minister is undermining the State of Israel and, worst of all, he is undermining the walls of isolation that were so diligently built around Hamas," Netanyahu told reporters, referring to Olmert's decision not to reject the Hamas-Fatah deal outright. Under Thursday's national unity pact, the Palestinians spoke of respecting past accords with Israel but there has been no sign that Islamist Hamas will yield to Western demands that it renounce violence and recognise Israel's right to exist. Olmert told Israeli lawmakers that he needs to assess where Palestinian President Mahmoud Abbas, Fatah's leader and Israel's designated "peace partner", stands after his deal with Hamas. Channel One television quoted political sources as saying right-winger Netanyahu saw Olmert, already bruised from last year's inconclusive war in Lebanon, as having only months left before his plummeting popularity triggers early elections. Olmert argued before parliament's Foreign Affairs and Defence Committee that it is Netanyahu who bears the blame for Hamas's ascendancy from a 1980s militia-cum-charity to a major force in the Middle East. "This is the man who propped up Hamas and revived it. He is the one who freed Sheikh Yassin and gave Hamas the option to thrive thanks to the silly business that happened when he was prime minister," an Israeli official quoted Olmert as saying. He was referring to Netanyahu's release of jailed Hamas founder and mentor Ahmed Yassin in 1997 -- a move to mollify Jordan after Israeli agents mounted, and botched, an attempt on the life of Hamas politburo chief Khaled Meshaal in Amman. Parliamentary elections are not due for two years but a poll by Haaretz newspaper last month found that if a fresh poll were held, Olmert's centrist Kadima party would win just 12 seats against 29 for Netanyahu's Likud in the 120-seat Knesset. Netanyahu bolted the cabinet of Olmert's predecessor, Ariel Sharon, just before Israel quit Gaza in 2005. Netanyahu said such unilateralism would buoy Hamas, a prediction seemingly borne out by the group's election victory last year. Olmert has since shelved a plan for redeploying in the occupied West Bank, where, like Gaza, Palestinians seek a state. Olmert is expected to reserve judgement on the Hamas-Fatah coalition at least until he meets Abbas next week along with U.S. Secretary of State Condoleezza Rice.
