SHARM EL SHEIKH, Egypt, Sept 14 (Marwa Awad/Reuters) - The Egyptian Red Sea coast once again provides the setting for efforts to coax along Middle East peacemaking but Egypt's power to shape the outcome is much diminished.

A mural on the highway entering Sharm el-Sheikh depicts the 1995 Summit of Peacemakers and offers a reminder of one of the initiatives staged in this Red Sea resort that withered in the heat of the Middle East conflict.

There are few expectations it will be any different on Tuesday when Israeli Prime Minister Benjamin Netanyahu and Palestinian President Mahmoud Abbas hold a second round of talks in Egypt after opening direct dialogue in Washington this month.

Egypt, which in 1979 became the first Arab state to sign a peace deal with Israel, has little ability to cajole the two sides into any deal.

No party other than the United States can play the role of sponsor. It is a superpower with the ability to impose solutions to the conflict and pressure both parties to agree, said Mohamed Bassiouny, the former Egyptian ambassador to Israel.

Speaking last week, Foreign Ministry spokesman Hossam Zaki said Egypt's role as host proved its prominent status but added: Egypt will not participate in the direct negotiations between the Palestinians and Israelis.

It is symbolic recognition of Egypt's role in the Middle East peace process. But its role is now diminished to being an essential supporter of peace talks, said Nabil Abdel Fattah at the Ahram Centre for Strategic and Political Studies.

It (Cairo) cannot force either of the two parties to reach an agreement, he added.

There are daunting obstacles ahead in these talks, including deep-seated differences between Israelis and Palestinians about Israel's settlement building, making it unrealistic a deal will be reached in a year -- the target at the start of the process.


ARAB SUPPORT

While it has regularly provided the table for talks, Egypt has had limited success in the past two decades in mediation.

Egypt hosted technical talks after the 1993 Oslo self-rule accords. Those discussions helped pave the way for then Palestinian leader Yasser Arafat to return to Gaza and the West Bank where he set up the Palestinian Authority.

But Cairo's more recent efforts to end a feud between the Islamist group Hamas, which controls Gaza, and Abbas's Fatah party in the West Bank showed no tangible progress even after a year of negotiations.

Despite a checquered past, the Arab world's most populous country which is home to the Arab League is still seen as a vital player in helping win over any Arab support.

Egypt's regional role remains relevant not because of its diplomatic gravitas but because of its geographical and cultural weight in the Arab world, political analyst Amr Hamzawy said.

Reflecting Egypt's regional role, when Netanyahu took office he chose to visit Mubarak in Sharm el-Sheikh before flying to Washington to meet Israel's key ally.

But like the summit mural at the Red Sea resort entrance, the most enduring images encourage caution, such as the photographs in 2003 of President George W. Bush chauffeuring Mubarak and Saudi King Abdullah in a Sharm el-Sheikh hotel golf cart.

The Middle East peace initiative launched at that time by Bush proved short-lived. (Additional reporting by Dina Zayed, writing by Edmund Blair and Marwa Awad; Editing by Samia Nakhoul)