PARIS, July 1 (Reuters) - France expects almost all Mediterranean leaders to attend a Paris summit with the European Union on July 13 to launch a Union for the Mediterranean, a source in President Nicolas Sarkozy's office said on Tuesday.

The source defended the decision, criticised by Sarkozy's predecessor Jacques Chirac, to invite Syrian President Bashar al-Assad to Paris, saying that if the summit were confined to democracies, hardly any Arab countries could attend.

"He certainly isn't a model of respect for human rights in Syria, but there is progress," the source said, citing the election of a president in Lebanon, the start of indirect Israeli-Syrian peace talks and the possibility of separating Syria from its radical ally Iran.

He said when Sarkozy visited Israel last week, leaders from across the political spectrum had unanimously praised his decision to invite Assad to Paris, which may lead to a first face-to-face meeting with Israeli Prime Minister Ehud Olmert.

"They all said: you are helping us," the source said, adding that when Sarkozy meets Assad on July 12, "we will take advantage to get everyone to meet each other."

Only Libyan leader Muammar al-Gaddafi is sure not to attend, the source said, adding that Sarkozy would try to convince Algerian President Abdelaziz Bouteflika to come when they meet privately in Japan on the sidelines of a G8 summit next week.

France launched the initiative to try to boost ties with the 27-nation EU's southern neighbours, several of which are former French colonies with close ties to Paris, after the relative failure of the so-called Barcelona process launched in 1995.

The French source noted that barely any Arab leader had attended a 2005 Euro-Mediterranean summit in Barcelona. (reporting by Paul Taylor; Editing by Charles Dick)