Stage is set but will U.S. debate go on?

OXFORD, Mississippi (Reuters) - The stage is set, but it was unclear on Friday if Republican John McCain would show up to duel Democrat Barack Obama in the first of three debates that could help decide a tight White House race.

McCain’s vow to skip the debate if a $700 billion rescue of the U.S. financial industry is not settled cast a pall of uncertainty over the campaign -- which deepened late on Thursday as bailout talks in Washington sank into disarray.

Debate sponsors said the show would go on. Obama said he would be in Mississippi whether McCain goes or not. But it takes two to debate -- and without McCain, there is no debate.

“I’m hopeful, very hopeful that we can,” McCain told ABC News on Thursday night of the prospects for having a debate. “I believe that it’s very possible that we can get an agreement ... in time for me to fly to Mississippi.”

McCain said on Wednesday he was “suspending” his campaign to return to Washington for the negotiations. But he gave a speech in New York on Thursday, continued airing ads and sent his vice presidential nominee, Alaska Gov. Sarah Palin, and surrogates out on the campaign trail.

At the invitation of President George W. Bush, Obama joined McCain and Bush in a White House meeting with congressional leaders on Thursday afternoon but the McCain campaign said the meeting “devolved into a contentious shouting match.”

Senior Democrats said McCain appeared to be backing an entirely new plan that was different from the Bush administration proposal under discussion for days. McCain aides said he did not endorse any plan and that the Obama-led Democrats “did not seek to craft a bipartisan solution.”

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Both candidates spent the night in Washington and planned to confer with congressional leaders on Friday morning when negotiations resume.

Obama said McCain’s decision to return to Washington and participate in the bailout negotiations had injected a sour dose of presidential politics into the proceedings.

“It’s not necessarily as helpful as it needs to be,” he told reporters after the White House meeting. “There was a lot of glare, the spotlight, there’s the potential for posturing or suspicions.”

The potential no-show by McCain unsettled organizers at the National Commission on Debates and the hosts at the University of Mississippi, which spent about $5 million to accommodate the event and the 3,000 journalists who descended on Oxford to cover it.

“This is going to be a great debate tomorrow night and we’re excited about it,” a confident Mississippi Gov. Haley Barbour, a Republican and a McCain supporter, told reporters in Oxford.

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The first debate was expected to be watched by far more than the 40 million Americans who saw the convention acceptance speeches of McCain and Obama, and could be a crucial factor for undecided voters in the November 4 election.

Public opinion polls have shown Obama making gains over the past week on the question of who could best lead the country on economic issues, and most polls have him holding a slight lead over McCain.

The debate is scheduled to focus on foreign policy and national security, although the turmoil on Wall Street has dominated the campaign trail for nearly two weeks and is almost certain to be featured.

Both camps have worked to lower expectations for their candidates in the high-stakes confrontation.

Obama aides have noted that national security and foreign policy is a strength for McCain, a 26-year veteran of Congress and a former prisoner of war in Vietnam. Opinion polls show voters favor McCain on security issues.

Earlier this week, McCain cited Obama’s soaring rhetoric on the campaign trail and his victory in the Democratic nominating battle over Sen. Hillary Clinton of New York.

“He’s very, very good. He was able to defeat Senator Hillary Clinton, who as we all know is very accomplished,” McCain said earlier this week at an Ohio campaign stop. “He was able to, I think, with his eloquence inspire a great number of Americans. So these are going to be tough debates.”

The second presidential debate is scheduled for October 7 and a third on October 15. The two vice presidential candidates -- Palin and Democratic Sen. Joe Biden of Delaware -- will debate on October 2.

Editing by Peter Cooney