Bush heads back to Mideast amid fading peace hopes

By Matt Spetalnick

WASHINGTON (Reuters) - President George W. Bush heads back to the Middle East on Tuesday facing broad skepticism over his chances of securing an Israeli-Palestinian peace deal before he leaves office in less than nine months.

His second trip to the region this year will get under way in Israel where celebrations of its 60th anniversary have been marred by a bribery scandal surrounding Prime Minister Ehud Olmert that could topple him and disrupt the peace process.

Bush also will be mindful of another crisis brewing next door in Lebanon, where a power struggle between the pro-Western government in Beirut and Iranian-backed Hezbollah could deal a further blow to U.S. efforts to stabilize the Middle East.

With the clock ticking down on his administration, Bush will nudge Israelis and Palestinians to advance their faltering negotiations as he tries to salvage a foreign policy legacy encompassing more than the unpopular war in Iraq.

But expectations for progress remain low.

"It's hard to remember a less auspicious time to pursue Arab-Israeli peacemaking than right now," said Jon Alterman, a Middle East expert at the Center for Strategic and International Studies in Washington. "The politics on the ground are absolutely miserable."

Olmert and Palestinian President Mahmoud Abbas agreed at a U.S.-hosted conference in Annapolis, Maryland, in November to try to reach a peace treaty, including an agreement on Palestinian statehood, by year's end.

Since then, talks have bogged down over Israeli settlement expansion plans in the occupied West Bank and violence in and around the Gaza Strip, where Hamas cross-border rocket fire has drawn a tough Israeli military response.

Increasingly pessimistic about Bush's efforts, Israelis and Palestinians alike are starting to look past him to his successor who will be picked in the November election.

SCANDAL OVERHANGS PEACE PROCESS

Further clouding peace hopes are questions about Olmert's future. The prime minister, who meets Bush on Wednesday, is facing widespread calls to resign over allegations he took bribes from a wealthy U.S. businessman. Though he has denied wrongdoing, he has pledged to quit if indicted.

Playing down the potential fallout, Bush told an Israeli television station that while he considered Olmert an "honest man," his vision for peace would remain the same.

There is concern, however, that Olmert's resignation would trigger new Israeli elections, putting peace efforts on hold.

Bush is pressing ahead anyway, though critics still view it as too little, too late after years of neglecting the conflict. He made his first trip as president to Israel and the West Bank in January but came away with little to show for it.

And the two sides remain so far apart that Bush has no plans to bring the leaders together during his visit.