As the sordid details of the “Olmert saga” are revealed, Israelis are also getting a second chance at much-needed political reform.

Our electoral system, developed in Poland during the 19th century and adopted by the Zionist movement, has perpetuated a corrupt and incompetent political class. Many of Israel’s “best and brightest” have avoided or dropped out of politics after realizing that success was incompatible with maintaining moral principles.

The dysfunctional electoral system is also a major source of the gridlock that has served Israel so poorly. After the founding generation of idealists – former prime minister David Ben-Gurion, Menachem Begin and their contemporaries – passed on, the centrality of political parties has allowed mediocre people (at best) to manipulate the system.

This framework excludes talented outsiders and allows corrupt elites to control the system. Their power is based on their role in small parties, which are justified on narrow ideological, religious and other grounds, and the fate of government coalitions is determined by the personal desires of their leaders. Israel’s national interests are lost in the process.

The dysfunctional nature of party-based politics and the need for reform was widely understood a number of years ago. Indeed, the Kadima party was created by former prime minister Ariel Sharon in response to public demands for a broad-based framework that would unite pragmatists from different groups.

But Sharon’s stroke ended this experiment, leaving Ehud Olmert as the accidental prime minister, with no interest in a reform process that would impede his own access to money and power. His first test was in the 2006 Lebanon war, and while his performance was less than adequate, he has been able to cling to power.

Olmert’s downfall would allow Israelis to try political reform again, based on support for leaders whose skills go beyond manipulation and fundraising. One option is Foreign Minister Tzipi Livni, who was until recently more of an outsider in politics, but she lacks the necessary experience.

Threats from Iran, Hamas, Lebanon, North Korean nuclear reactors in Syria, etc., highlight the importance of security credentials for Israel’s future leaders. Within Kadima, former IDF chief of staff Shaul Mofaz, is clearly eager to become prime minister, but the years that Mofaz has spent in politics have tainted him. In the other parties, former prime ministers Benjamin Netanyahu and Ehud Barak are unlikely candidates for reforming the system. The Likud and Labor parties are the pillars of the failed political framework.

More likely, leaders of the “second wave” of reform will come from a cadre of respected Israelis who left politics rather than joining in the corruption, as well as from former Israel Defence Forces generals with track records that combine competence and the refusal to play the political game by the old rules.

Uzi Dayan and Moshe Ya’alon both fit this description – as military leaders, they demonstrated both skill and commitment to the national interest. And after leaving the IDF, both have spoken out on public issues while refusing to be tarnished by old-style politics. There are many others in this group.

In restarting the reform process, the need to separate money from politics is central. No democracy is immune – the British Labour Party has had its share of funding scandals, and despite financing regulations, U.S. election campaigns are dependent on massive donations. But in Israel, the fragmented political system has greatly amplified the harmful impact of dependence on influential donors and the resulting “get rich quick” schemes.

Earlier, money was generated through the alliance between the Histadrut labour union and the Labor party, and when Labor finally lost power in 1977, the centre of gravity shifted to wealthy individuals, both in Israel and abroad. Neither arrangement placed the national interest at the centre of the political process.

The post-Olmert era will present another opportunity for reform based on the principles of good government. Changing the system will not cure all of Israel’s problems – internal or external – but it will give us a fighting chance to choose the type of leaders that are necessary for Israel’s success in the next 60 years.