(refiles to fix spelling of bipartisan in headline) By Carol Giacomo, Diplomatic Correspondent WASHINGTON, Dec 6 (Reuters) - An elite bipartisan panel of Washington insiders has laid down a formidable challenge to U.S. and Iraqi political leaders for dealing with the chaos in Iraq but whether they can meet it is a major question. "Our political leaders must build a bipartisan approach to bring a responsible conclusion to what is now a lengthy and costly war," said former Secretary of State James Baker and former Rep. Lee Hamilton, the co-chairmen. Already, there is resistance from both ends of the political spectrum to some of the Iraq Study Group's major recommendations, including its heavy emphasis on reviving Arab-Israeli peace efforts as an integral component of stabilizing Iraq and the region. But there may be enough diplomatic fudge language for all parts of Washington's polarized political community to grab on to. "I think we all know there is no quick or easy way to complete the important mission in Iraq, and those who hoped this report would provide a get-done-quick solution will be disappointed," said Republican Sen. Mitch McConnell of Kentucky. "And though we won't reach agreement overnight, this is an opportunity for us to work in a bipartisan way with Democrats and the White House and reach consensus on one of the most critical issues before the Congress," said McConnell, who will become Senate Republican leader in January. Many experts question whether President George W. Bush, even with his legacy on the line, and Iraqi Prime Minister Nuri al-Maliki can muster the wherewithal to make what the 10-member panel says are essential policy changes. "The Iraq Study Group will have given Bush the cover to make very dramatic changes if he wants to," said Iraq expert Larry Diamond, who was an adviser to the panel. "But emotionally and intellectually, I think he has limited space in the sense that I don't think he'll be able to bring himself to do it," he told Reuters. The report has intensified pressure on Bush to shift course, urging that U.S. forces begin to withdraw from combat in Iraq and calling for a new diplomatic and political push to halt a "grave and deteriorating" crisis. But by ordering up other studies -- from the Pentagon, the White House and the State Department -- Bush may make it possible to dilute the panel's views and dodge the perception that he is bending to the will of others. An executive summary of the group's report, while brutally frank in assessing the potentially catastrophic consequences of the deteriorating conditions in Iraq, is more cautious about how to deal with the country internal political problems which many experts say is crucial to any peaceful solution. The panel says the United States should reduce its political, military and economic support if the Iraqi government does not make substantial progress toward specific milestones on national reconciliation, security and governance issues. But many experts and lawmakers have said Iraq needs a wholesale restructuring to bring about a more politically stable balance between Shi'ites and Sunnis. After a different bipartisan commission, also co-chaired by Hamilton, examined events related to the 9/11 attacks, they made an extraordinary effort to press the administration and Congress to implement its recommendations. But Baker -- a close Bush family friend who served as secretary of state for Bush's father -- is unlikely to do that this time, for fear of being seen as confrontational with the son. Democrats, who won control of Congress last month largely by calling for change in Iraq, are unlikely to let the matter drop. "Last month, the voters threw the president's Iraq policy overboard. Today, the Iraq Study Group is throwing him a life raft. The president appears unaware that his 'stay the course' Iraq policy is going under, and that it's time to listen to some outside advice," said Democratic Rep. Edward Markey of Massachusetts.
