(Updates with Hadley comments, paragraphs 9-10, 19-20, previous WASHINGTON) By Matt Spetalnick ABOARD AIR FORCE ONE, May 13 (Reuters) - President George W. Bush headed 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 begin 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. Speaking to reporters on Air Force One en route to the Middle East, U.S. national security adviser Stephen Hadley said Bush was still confident an Israeli-Palestinian deal could be reached before the end of his term in January. "He thinks it still can be done. It's obviously hard . ... There's limited time left, but I think we believe the parties are making progress," Hadley said. 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. Although 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, although 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. The two sides remain so far apart that Bush has no plans to bring the leaders together during his visit. Many Israelis are ready to welcome Bush to their 60th birthday celebration, seeing him as the best ally the Jewish state has had in the White House, whereas much of the Arab world doubts his ability to be an even-handed peace broker. Palestinians hold out little hope that Bush will show sensitivity to their perspective -- that the creation of a Jewish homeland in 1948 meant the displacement of hundreds of thousands of Arab residents. Hadley told reporters, "We are going to Israel to celebrate the 60th anniversary of the state of Israel and that is a great event. But that resulted in hardship for many of the Palestinian people." Asked if Bush might make a speech about that, Hadley said: "Let's see what he says. He's got some speaking opportunities." Bush will stay out of the Palestinian areas and instead hold talks with Abbas at the Egyptian resort of Sharm el-Sheikh on Saturday. Like Olmert, Abbas is weak at home. He governs only in the West Bank while Hamas Islamists control Gaza. Also on Bush's agenda in Egypt is a meeting with Lebanese Prime Minister Fouad Siniora, who faces an armed challenge from Hezbollah. Bush has had little success stabilizing Lebanon as part of his democracy push in the Middle East. Bush will stop in Saudi Arabia on Friday and again try to coax King Abdullah to help curb record oil prices, an appeal likely to fall on deaf ears. (Editing by Cynthia Osterman and Eric Walsh)
Lebanese soldiers in armoured personnel carriers are deployed in Tripoli May 13, 2008. Lebanon's army stepped up patrols on Tuesday as part of a drive to restore order after a week ...
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