June 4, 2008 - 5:41pm

US Secretary of State Condoleezza Rice made clear on Tuesday Washington will press for an Israeli-Palestinian peace deal this year despite the corruption scandal dogging Israeli Prime Minister Ehud Olmert.

Olmert, who arrived in Washington on Tuesday at the start of a three-day visit, has rebuffed calls that he leave office over allegations that he took envelopes stuffed with cash from a Jewish-American businessman.

"The present opportunity is not perfect by any means," Rice told a policy conference of the American Israel Public Affairs Committee, a pro-Israeli lobby group, without mentioning Olmert's political troubles.

"But it is better than any other in several years and we need to seize it," she added. "We still believe that we have a chance to reach an agreement on the basic contours of a peaceful Palestinian state."

Olmert, who is to see President George W. Bush at the White House on Wednesday, has described the $150,000 in cash and unpaid loans he received from the businessman as legitimate election campaign contributions. Both men deny wrongdoing.

US officials acknowledge the uncertainty about Olmert's future had made their task of trying to strike some kind of an outline peace deal this year even harder.

The political crisis could trigger an early Israeli election and derail the peace talks, Israeli, Palestinian and Western officials say. Olmert says he will resign if indicted.

Olmert met in Jerusalem on Monday with Palestinian President Mahmoud Abbas, who has been politically weakened by the takeover of the Gaza Strip by Hamas Islamists last June.

Officials said Olmert's strategy was to push ahead with negotiations with the Palestinians, as well as indirect talks with Syria, as if nothing has changed, in the hope the police investigation does not end in charges against him.

"This process will continue," Olmert's spokesman, Mark Regev said of the talks with the Palestinians. The talks have shown few visible signs of progress, leading to deep scepticism among Israelis and Palestinians that they are going anywhere.

White House spokeswoman Dana Perino acknowledged that the corruption scandal has garnered heavy media attention, but said, "our focus hasn't been on that... President Bush has to keep his focus on the big picture."

Iran's 'vulnerabilities'

Before leaving Israel, Olmert said that while in Washington he would discuss issues at the core of Israel's existence, an allusion to Iran's uranium enrichment programme, which he has termed a threat to the Jewish state's survival.

The United States accuses Iran of pursuing atomic weapons under cover of its civil nuclear programme. Iran denies this and has said its nuclear programme is to generate electricity.

Rice argued for increasing international pressure on Iran, which faces three UN Security Council sanctions resolutions over its nuclear programme.

"Our partners in Europe and beyond need to exploit Iran's vulnerabilities more vigorously and impose greater costs on the regime economically, financially, politically and diplomatically," Rice said.

"A regime that denies the Holocaust, threatens and murders its neighbours citizens, and seeks to destroy a member of the United Nations should not be allowed to cross the nuclear threshold," she added, referring to strong anti-Israel statements by Iranian President Mahmoud Ahmadinejad.

Olmert planned to meet Rice and to give an evening address at the AIPAC policy conference later Tuesday. On Wednesday, he will meet Bush and dine with Vice President Dick Cheney.

In an unsourced report, Israel's biggest newspaper, Yediot Ahronot, said Bush would offer Olmert a "farewell gift" - a security package, including an advanced radar system that will enhance the country's defence against long-range missiles.

The newspaper said Olmert would ask Bush to allow Israel to buy the F-22 stealth fighter, an aircraft that has not been cleared for overseas sale.

Gaza air strike

An Israeli air strike injured three Islamic Jihad fighters in the Hamas-controlled Gaza Strip on Tuesday after cross-border rockets fired from the territory wounded five Israelis.

One of the Islamic Jihad fighters was critically injured in the air strike near the southern Gaza town of Khan Younis, medical officials and Islamic Jihad said.

An Israeli army spokesman said the air strike had targeted a single "armed Palestinian as he was preparing to launch rockets" into Israel.

The spokesman said the same area had been used by fighters earlier in the day to launch five cross-border rockets at the Israeli village of Yesha, injuring five agricultural workers.

Israel frequently launches raids into the Gaza Strip, which it says are aimed at curbing cross-border rockets fired by Palestinian militants. The rocket salvoes rarely cause death or injury but sow panic in southern Israeli communities.


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