* Trump son-in-law Kushner to lead Bahrain 'workshop'
* Israeli and Palestinian officials absent
* Scepticism whether Gulf states will open checkbooks
* Reluctance due to lack of political solution to conflict
* U.S.-Iran tensions overhang meeting across Gulf from Iran (Adds Kushner quotes)
By Matt Spetalnick and Stephen Farrell
MANAMA/JERUSALEM, June 25 (Reuters) - The first stage of President Donald Trump's Middle East peace plan will be launched on Tuesday at a conference the White House touts as a bid to begin drumming up $50 billion in investment but which Palestinians deride as an "economy first" approach doomed to fail.
The two-day international meeting in Bahrain, led by Trump's son-in-law, Jared Kushner, has been billed as the first part of Washington's long-delayed broader political blueprint to revive the moribund Israeli-Palestinian peace process, which will be unveiled at a later date.
But neither the Israeli nor Palestinian governments will attend the curtain-raising event in the Bahraini capital, Manama.
There will be close scrutiny as to whether attendees such as Saudi Arabia and other wealthy Gulf Arab states show any interest in making actual donations to a U.S. plan that has already elicited bitter criticism from Palestinians and many others in the Arab world.
Bahrain, a close American ally and home to the U.S. Navy's Fifth Fleet, has been making preparations for weeks.
Although the conference is supposed to focus on economics, Gulf Arab states hope their presence will also show their solidarity with the Trump administration over its hardline against Iran, a senior Gulf diplomat said on condition of anonymity.
Under the plan, donor nations and investors would contribute about $50 billion over 10 years, with $28 billion going to the Palestinian territories - the Israeli-occupied West Bank and the Gaza Strip - as well as $7.5 billion to Jordan, $9 billion to Egypt and $6 billion for Lebanon.
Among 179 proposed infrastructure and business projects is a $5 billion transport corridor to connect the West Bank and Gaza.
"I laugh when they attack this as the ‘deal of the century,'" Kushner told Reuters, referring to the lofty nickname that Trump's peace plan has assumed over the past two years.
"This is going to be the ‘opportunity of the century' if they have the courage to pursue it."
Kushner, a senior Trump adviser who like his father-in-law comes from the world of New York real estate, is presenting his plan in a pair of pamphlets filled with graphs and statistics that resemble an investment prospectus.
But pushing back against critics who accuse Kushner of trying to forge a strictly "economic peace," he told Reuters last week: "A lot of past attempts have failed. Calm down ... and keep an open mind."
PEACE TO PROSPERITY
Even so, expectations for success are low. The Trump team concedes that the economic plan - billed "Peace to Prosperity" - will be implemented only if a political solution to one of the world's most intractable conflicts is reached.
Any such solution would have to settle long-standing issues such as the status of Jerusalem, mutually agreed borders, satisfying Israel's security concerns and Palestinian demands for statehood, and the fate of Israel's settlements and military presence in territory Palestinians want to build that state.
In an interview with Al Jazeera set to air on Tuesday, Kushner offered a rare glimpse into the possible political contours of the plan, saying a deal would not adhere to the Arab Peace Initiative, a Saudi-led plan that has been the Arab consensus on the necessary elements for a Palestinian deal since 2002.
"I think we all have to recognise that if there ever is a deal, it's not going to be along the lines of the Arab Peace Initiative. It will be somewhere between the Arab Peace Initiative and between the Israeli position," Kushner told Al Jazeera.
The Arab Peace Initiative offers Israel normal ties with the Arab world in exchange for a Palestinian state drawn along borders that predate Israel's capture of territory in a 1967 war and a fair solution for Palestinian refugees. Israel has rejected some of the initiative's main provisions.
Hanging over the entire initiative are persistent questions about whether the Trump team plans to abandon the "two-state solution," a long-standing principle of Middle East peacemaking that involves creation of an independent Palestinian state.
But the Trump team has consistently refused to commit to it.
Israeli Prime Minister Benjamin Netanyahu, a close Trump ally, has his own domestic problems, facing an election, and possible corruption charges after a long-running police investigation. He denies any wrongdoing.
"We'll hear the American proposition, hear it fairly and with openness," Netanyahu said on Sunday. Although no Israeli government ministers will attend, an Israeli business delegation is expected.
Palestinian leaders have boycotted the workshop, and are refusing to engage with the White House - accusing it of pro-Israel bias after a series of recent Trump decisions. Kushner told Reuters that "some" Palestinian businessmen would be present.
Palestinian President Mahmoud Abbas, whose Palestinian Authority exercises limited self-rule in the Israeli-occupied West Bank, was scathing about its prospects of success.
"Money is important. The economy is important. But politics are more important. The political solution is more important," he said.
Hamas, the Islamist militant group that controls Gaza, has found itself in rare agreement with its arch-rival Abbas. "The Palestinian people only and no one else can represent the Palestinian cause," Hamas official Mushir al-Masri said.
Kushner insists, however, that the economic plan is intended to help draw Palestinians back to the negotiating table by showcasing the benefits a peace deal could bring.
Kushner said that even without the Israeli and Palestinian governments represented, the presence of Israeli business executives and journalists with their Arab counterparts would be significant at a time of rising tensions with Iran.
"People realize that the real threat to that region is Iran and their aggression, and Israel and a lot of the other Arab states have a lot more in common today than they did before," he said.
David Makovsky, a Washington-based Middle East expert, agreed that although the principal focus of the event was the Israeli-Palestinian conflict, "Iran is higher on the chain of interest right now."
However, Makovsky, whom the White House has invited as an observer, said of the Trump-Kushner plan: "No one believes you can solve this thing economically without addressing the political issues."
(Reporting by Matt Spetalnick and Stephen Farrell; Additional reporting by Nidal al-Mughrabi in Gaza and Rami Ayyub in Ramallah; Writing by Stephen Farrell; Editing by Peter Cooney and Michael Perry)
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