Bush launches Middle East peace drive in Israel

JERUSALEM (Reuters) - U.S. President George W. Bush arrives in Israel on Wednesday aiming to boost efforts to achieve a peace deal between Israelis and Palestinians before he leaves office in a year.

Bush will be making his first presidential visit to Israel and the occupied West Bank to try to keep up the momentum of negotiations between the parties created at a peace conference in the U.S. town of Annapolis in November.

The chances of completing a deal on establishing a Palestinian state before he leaves office in January 2009 appear slim, and no breakthroughs are expected during the three days of talks he will have with Israeli and Palestinian leaders.

On Wednesday, Bush will meet Israeli Prime Minister Ehud Olmert in Jerusalem and on Thursday he will focus largely on the West Bank cities of Ramallah and Bethlehem and will meet Palestinian President Mahmoud Abbas.

Olmert and Abbas agreed on Tuesday to begin peace talks on the thorniest issues despite major differences over Jewish settlement construction near Jerusalem.

They authorized negotiations on all final-status issues, from setting statehood borders to deciding the fate of Jerusalem and Palestinian refugees, Israeli and Palestinian officials said.

Neither side gave a starting date for the talks, but Palestinian negotiator Saeb Erekat said they would begin "immediately".

The first final-status talks in seven years were supposed to get under way soon after the Annapolis conference, but the Palestinians demanded Israel first commit itself to ceasing all settlement activity.

The final-status negotiations will be conducted largely in secrecy by Israeli Foreign Minister Tzipi Livni and former Palestinian Prime Minister Ahmed Qurie, officials said.

In a sign of the tough going ahead, Palestinian Interior Minister Abdel-Razak al-Yahya accused Israel of hampering his efforts to keep order in the West Bank, saying it wanted chaos there as a pretext not to make headway on the political track.

Olmert, weakened by the 2006 Lebanon war, could face new calls to resign at the end of the month when a commission of inquiry issues its final report on the conflict. His coalition government is already under strain over the peace talks.

While Bush has called settlement expansion an "impediment", doubts remain over how much pressure he will be willing to put on Israel, a key ally, to make compromises.

During a tour of the region that will include a number of Arab countries, Bush will hope to enlist support to help contain U.S. foe Iran, a goal underscored by a confrontation between U.S. and Iranian vessels in the Strait of Hormuz at the weekend.

Bush said on Tuesday Iran committed "a provocative act" in the Strait of Hormuz when Iranian speedboats approached three U.S. Navy ships and threatened that the ships would explode.

(Additional reporting by Matt Spetalnick and Adam Entous; Writing by Ori Lewis; Editing by Tim Pearce)