In meetings with Israeli President Shimon Peres and Prime Minister Ehud Olmert following his arrival, Bush stated that he had come to the Middle East full of optimism that a final status peace agreement can be reached between Israel and the Palestinians before his term as president expires a year from now.

Earlier in the day at a arrival ceremony at Ben Gurion International Airport, Mr. Bush paused while greeting Israeli government ministers to sternly warn Trade Minister Eli Yishai that he needed to speak with the Shas Party leader about his faction's threat to pull out of the ruling coalition if any deals are made with Palestinian leader Mahmoud Abbas.

Yishai responded that the two could discuss the matter at a state dinner on Thursday.

On Tuesday, Shas issued a statement threatening to exit the government if Olmert allows Israel to be coerced into an unfavorable peace agreement with the Abbas regime, which exercises authority over only a portion of the Palestinians.

The Shas statement also rejected the idea of holding peace talks while Palestinian rockets are still raining down on southern Israel.