Iran, Mideast peace top Bush-Olmert agenda

WASHINGTON -- A corruption scandal engulfing Israeli Prime Minister Ehud Olmert was pushed into the background Wednesday as the beleaguered Israeli leader and staunch ally President Bush displayed chummy relations and declared resolve against Iran and for Mideast peace.

Bush warmly saluted Olmert as "my friend" twice in less than a minute of remarks before their Oval Office talks.

Olmert, clearly delighted to be again at the side of the U.S. president whose popularity in Israel far exceeds his own, gushed over Bush and grinned broadly at him throughout his brief statement. He effusively praised Bush's speech last month before the Israeli Knesset in Jerusalem, widely interpreted as favoring Israelis over Palestinians in their long-running dispute, as "the best expression of the United States commitment to the security and the well-being of the state of Israel." He even said he admired Bush's emotions.

Olmert's political future has been thrown into doubt because of testimony from New York businessman Morris Talansky, who says he gave Olmert envelopes stuffed with cash over a decade and a half, in part to fund a lavish lifestyle. Olmert's political allies are conspicuously refusing to come to his defense, and instead are jostling for his job.

Olmert's key coalition partner, Defense Minister Ehud Barak, now says he'll topple the government if Olmert doesn't step aside. And Olmert's rivals in his Kadima Party, including his popular deputy, Foreign Minister Tzipi Livni, are gearing up for party primaries.

The developments are jeopardizing Bush's already ambitious timetable for an Israeli-Palestinian peace agreement by year's end.

But the situation was not mentioned as Bush and Olmert addressed reporters, and Olmert later told reporters his problems hadn't come up in his talks with Bush.

There are hints, though, that the Bush administration understands Olmert may well be on his way out. Hadley stressed, as have other administration officials recently, that the negotiations between the Israelis and Palestinians are entered into by Olmert "on behalf of the government." The implication is that the process can proceed -- even succeed -- without Olmert in place.

Olmert said he thought it was still possible to make real progress before the deadline. "I hope that we will be able to make decisions during 2008," he told reporters, and noted that "not even half of the year has gone by."

This is a shift from Bush's initial reasoning for why an agreement could be reached this year -- because Olmert and Palestinian President Mahmoud Abbas are the right leaders at the right time to reach a historic but painful-to-all compromise.

"It involves participation by other ministers in this process -- Foreign Minister Livni and Defense Minister Barak," Hadley said. "So, at this point, we follow the lead of the parties and the parties have indicated that they want to continue this process."

As they spoke, Abbas called for a new dialogue with Hamas, the militant group that has taken control of the Gaza Strip from the Palestinian government. Abbas said he will call for new legislative and presidential elections if the talks succeed.

The emphasis Bush chose, unprompted, for reporting on their talks was Iran, reflecting the importance of the topic to Israel.

Both countries are concerned about Tehran's nuclear intentions, but Israel believes that Iran has not suspended its uranium enrichment program despite U.S. intelligence report to the contrary. Olmert called Iran "the main threat to all of us" and later told reporters that it dominated the leaders' discussions.

In public, Bush sought to reassure Israelis worried about the U.S. commitment to keeping Iran from obtaining a nuclear bomb and posing an even greater threat to Israel. Iranian President Mahmoud Ahmadinejad has said that Israel will one day be "wiped off the map."

"Iran is an existential threat to peace," Bush said. "It's very important for the world to take the Iranian threat quite seriously, which the United States does."

Hadley said that Bush plans to discuss with European leaders on a trip next week "how to step up our diplomatic efforts," including enacting stronger sanctions against Tehran. "We are taking action ourselves and urging other countries to increase pressure on Iran," he said.

In a post-meeting briefing for reporters, Olmert said Iran had been the dominant subject of his discussion with Bush, reflecting a "shared, deep understanding about the danger of the Iranian threat and the need to deal with it in a way that will bring the result we want."

"Every passing day we make another real step to deal with this problem in a more effective way," he said. "I don't think it would be helpful if I went into detail."

Israeli newspapers reported that Olmert hopes to acquire a sophisticated U.S. missile defense system, advanced radar and new warplanes. He would not say whether he brought up those requests with Bush.

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Associated Press writer Matti Friedman contributed to this story.