Israeli bribery scandal clouds Bush visit

By Matt Spetalnick

WASHINGTON (Reuters) - When President George W. Bush accepted Prime Minister Ehud Olmert's invitation to Israel's 60th birthday celebration, there was little reason to think his visit would do much to advance Middle East peace prospects.

But with a bribery scandal now threatening to topple Olmert and disrupt fragile U.S.-sponsored talks with the Palestinians, the chances for progress are looking worse than ever.

Already facing deep skepticism over his effort to secure a peace deal before leaving office in January, Bush can ill afford to lose Olmert, Israel's chief negotiating partner with Palestinian President Mahmoud Abbas.

Israel's political crisis has cast a cloud over festivities marking six decades since the founding of the Jewish state and all but guaranteed that Bush's May 14-16 visit will be more of symbolism than of substance.

"It's highly unlikely Bush will get any real movement," said Haim Malka, a Middle East expert at the Center for Strategic and International Studies. "The constraints are numerous ... and Olmert's troubles add new complications."

Olmert admitted on Thursday taking cash from a U.S. businessman. He denied, however, that he had been bribed and resisted widespread calls to resign, but said he would step down if formally indicted.

If Olmert goes and his shaky coalition collapses, an Israeli election would make Bush's end-of-term deadline for a peace treaty, including an agreement on Palestinian statehood, look even less attainable.

Even if Olmert can weather the political storm, it will further weaken his hold on power and leave him with little room to maneuver in talks with the Palestinians.