Bush nudges Israel and Palestinians toward peace

By Mohammed Assadi and Jeffrey Heller

WASHINGTON (Reuters) - President George W. Bush launched a U.S. drive to create a Palestinian state on Monday, with Israelis and Palestinians nearing an agreement to address the toughest issues of their decades-old conflict.

His legacy dominated by war in Iraq -- and 14 months before leaving office -- Bush began three intense days of Middle East diplomacy in separate Oval Office meetings with Israeli Prime Minister Ehud Olmert and Palestinian President Mahmoud Abbas.

No one predicted a breakthrough in a conflict that has outlived many a U.S. president and Middle Eastern leader.

U.S. Secretary of State Condoleezza Rice, putting her credibility on the line, assembled representatives from more than 40 countries, many driven by a desire to prevent Iran from becoming a dominant -- and nuclear -- Middle East power.

Joining the talks were Syria, a frontline state formally at war with Israel, and Saudi Foreign Minister Prince Saud al-Faisal, who said Washington had made clear it would "use its full influence" to ultimately bring about a peace agreement.

If the two sides could not agree, he told reporters, "we assume the United States will come up with its own ideas."

After a Monday dinner at the State Department, participants were to gather Tuesday at the U.S. Naval Academy in Annapolis, Maryland, for a largely symbolic meeting to launch talks between Olmert and Abbas, both politically weakened at home.

Bush told Olmert he looked forward to a serious dialogue with the two leaders "to see whether or not peace is possible." Bush thanked Abbas for "working hard to implement a vision for a Palestinian state."

"The United States cannot impose our vision but we can help facilitate," Bush told Abbas.

Speaking later to reporters, Olmert said he expected negotiations on Palestinian statehood to begin soon after the Annapolis conference but gave no specific dates.

Despite long-standing frictions, Israeli and Palestinian officials said they were close to agreement on a document that would outline the peace goals to follow this week's sessions.

SIDES 'CONVERGING'

The document will chart the course for negotiating the toughest issues of the conflict known as "final-status issues" -- Jerusalem, borders, security and Palestinian refugees.

State Department spokesman Sean McCormack said both sides were "converging" on a document and that Rice would meet later with the chief negotiators from each side to help work on it.

Abbas said during his talks with Bush: "Our hope is high that we will come out of this conference in order to begin negotiations on the 'final-status' issues, in order to reach a peace agreement between the Palestinians and the Israelis so that security and peace can prevail."