(Adds analyst, Olmert, background)
By Firouz Sedarat
DUBAI, Jan 27 (Reuters) - U.S. President Barack Obama said the time was ripe for Israel and the Palestinians to resume peace negotiations and that America was prepared to extend a hand of peace to Iran if it "unclenched its fist."
In his first interview with Arab television since taking office, Obama told Al Arabiya on Monday night that his administration would adopt a more comprehensive approach in its ties with the Muslim world.
"It is impossible for us to think only in terms of the Palestinian-Israeli conflict and not think in terms of what's happening with Syria or Iran or Lebanon or Afghanistan and Pakistan," Obama told the Dubai-based Arabic satellite channel.
He praised Saudi King Abdullah for putting forward an Arab plan for peace in the Middle East.
On Iran, Obama said he believed it was important to use all the tools of U.S. power with Tehran, including diplomacy.
"It is important for us to be willing to talk to Iran, to express very clearly where our differences are, but (also) where there are potential avenues for progress," he said.
"If countries like Iran are willing to unclench their fist, they will find an extended hand from us."
Obama, who took office on Tuesday, said he had begun to meet his campaign vows by naming former Senator George Mitchell as Middle East envoy. Mitchell was scheduled to arrive in Egypt on Monday night on the first leg of a regional visit.
"Sending George Mitchell to the Middle East is fulfilling my campaign promise that we're not going to wait until the end of my administration to deal with Palestinian and Israeli peace. We're going to start now," Obama said.
He said his administration wanted to begin by listening and talking to those involved without prejudging their concerns.
"We cannot tell either the Israelis or the Palestinians what is best for them... They are going to have to make some decisions," he said.
"But I do believe that the moment is ripe for both sides to realise that the path that they are on is one that is not going to result in prosperity and security for their people. And that instead, it's time to return to the negotiating table."
Israeli Prime Minister Ehud Olmert said on Monday he was "optimistic" because Obama had assured him that he intended to maintain Washington's "traditional commitment" to Israel.
"I know that when he sends his emissary to ... Israel this is not in order to argue with us but to look together... and find a way that will help both sides, together with the Palestinians, to come to terms that will allow us to ultimately agree on a comprehensive settlement," Olmert said in English.
Obama praised Saudi King Abdullah for the Saudi-sponsored peace initiative, which offers Arab peace to Israel in exchange for its withdrawal from Arab land occupied since 1967 and a just solution for Palestinian refugees.
"I might not agree with every aspect of the proposal, but it took great courage to put forward something that is as significant as that," Obama said. "I think that there are ideas across the region of how we might pursue peace."
Saudi Prince Turki al-Faisal warned Obama in an article published this month that U.S.-Saudi ties were at risk unless Washington changed tack on the Israeli-Palestinian conflict.
Noting that he has lived in Muslim countries and has Muslim family members, Obama said: "My job to the Muslim world is to communicate that the Americans are not your enemy."
He urged Muslims to judge him by his actions, pointing to the decision to close the Guantanamo Bay detention centre, where detainees in the U.S. war on terror are held. He said he also would begin to implement his pledge to draw down troops in Iraq.
But while Arabs have high hopes that Obama will change U.S. policies, analysts said he had yet to spell out how he would achieve a two-state solution and manage the Iraq withdrawal.
"We have to lower our expectations that he has a magic wand to solve all our problems," said analyst Mustafa Alani.
"The Arab attitude is basically optimistic that Obama will turn a new page and his inaugural speech reached out to Muslims but the devil is in the detail."
Asked about the sharp verbal attacks on him by al Qaeda leaders behind the Sept. 11, 2001 attacks on the United States, Obama said it showed "that their ideas are bankrupt".
"In my inauguration speech, I spoke about: You will be judged on what you've built, not what you've destroyed. And what they've been doing is destroying things," he said. "I think the Muslim world has recognised that that path is leading no place, except more death and destruction."
(Additional reporting by Washington bureau and Lin Noueihed; Editing by Samia Nakhoul)
(Gulf newsroom; firstname.lastname@example.org +971 4 391-8301))