Declaring that she had exhausted all alternatives, Kadima leader Tzipi Livni on Sunday handed back the mandate President Shimon Peres gave her last month to form a government. During their meeting at Beit Hanassi, Livni informed Peres of her decision: General elections as soon as possible. According to the Basic Law: Government, the president now begins a process that will likely lead to elections being set for Tuesday, February 17. "Since I was appointed to form a government, I made it clear that I would look into all options to form a stable government before deciding on going to general elections," Livni told reporters following her meeting with Peres. "I have exhausted the process. I could have stood here today and presented a government. I was willing to pay a certain price to form a government, but I wasn't willing to mortgage the economic and the political future of the State of Israel and sacrifice the hope for a better future and different politics." Livni said that her efforts had included an attempt to form a broad unity government, and an offer to Shas to support needy families "despite the cutbacks in the budget." "In recent days, I have realized that the fact that the government is in the latter part of its term brings with it impossible demands from future partners, both in the economic and the political arenas. There are prices that can be paid and prices that others are willing to pay only to become a prime minister in a paralyzed government," she said. "I drew my lines, and I believe the people of Israel would like their leaders to have red lines and to stick to them. I believe my obligation was to exhaust this option. In my opinion, he who is willing to sell everything he believes in just to sit in that chair, shouldn't be sitting in the prime minister's chair," Livni said. It was no secret that the public was sick of politics as usual, she said. "I know the political game perfectly, and I chose to conduct myself in it in my own way. May the most worthy, who puts the good of the country foremost, win," she said. Livni's decision came after Shas and Degel Hatorah, which constitutes half of the United Torah Judaism faction in the Knesset, announced over the weekend that they would not join a Livni-led coalition. Peres, who asked Livni on September 22 to form a government, began consultations on Sunday night with representatives of Shas, Likud and Kadima, and will continue meeting with Knesset factions over the next three days. He must either designate another MK to form a coalition or inform Knesset Speaker Dalia Itzik that he sees no possibility of establishing a new government. Livni's decision paved the way for Prime Minister Ehud Olmert to remain in office for several months. Olmert will open the Knesset's winter session on Monday afternoon and his caretaker government will continue to serve until a new coalition is formed and wins the support of a Knesset majority. Olmert made clear at the weekly cabinet meeting on Sunday that he would not use his speech to the Knesset on Monday to discuss any significant diplomatic initiatives. "The Knesset winter session will begin tomorrow," Olmert said. "Such events are usually marked by a statement from the prime minister that focuses on presenting the national agenda as the prime minister sees it ahead of the winter session, and in a normal situation, this is as it ought to be." But, Olmert said, he did not feel this would be appropriate at this time. "Therefore, I will make short remarks on socioeconomic issues, and not on those that certainly stand at the core of serious disagreements among the Israeli public, which will continue to top the national agenda but which, in current circumstances, I do not think it proper for me to discuss," he said. Meanwhile, a source close to Transportation Minister Shaul Mofaz told The Jerusalem Post that he had no plans to part from Kadima and run for the premiership on a different list, or to return to the Likud. "The decision to go to general elections was a decision that was made by Livni with Mofaz's support. This decision was a no-other-choice decision," the source said. Ministers leaving the cabinet session were divided on the issue. "There is no doubt that Shas's demands were not financial or out of concern for the poor," Construction and Housing Minister Ze'ev Boim (Kadima) said. "For more than a year Shas has sat in a government that started the Annapolis process, and surely they knew that Jerusalem is part of the political process. To my understanding, [Shas chairman] Eli Yishai didn't want to join the government right from the start." But Yishai had an explanation of his own. "I don't think Livni failed... but if we joined the government, we would have been accused of selling Jerusalem for a few shekels," Yishai said. Meretz chairman Haim Oron said in a meeting with his party that "the fate of the people of Israel is determined between the morning prayer at [Shas spiritual leader] Rabbi Ovadia Yosef and [Labor chairman Ehud] Barak's respect-games." Herb Keinon contributed to this report.