By Matt Spetalnick and Tabassum Zakaria
SHARM EL-SHEIKH, Egypt (Reuters) - President George W. Bushsought to reassure sceptical Arabs on Sunday he is committed tosecuring a deal on Palestinian statehood before he leavesoffice, despite his outspoken support for Israel.
Wrapping up his Middle East tour in the Egyptian resort ofSharm el-Sheikh, Bush was looking to ease Palestinian dismayover his visit to Israel, where he lavished the Jewish statewith praise, hailing it as a "homeland for the chosen people".
Bush used a speech to a mostly Arab audience at the WorldEconomic Forum in Sharm el-Sheikh on Sunday to insist he"firmly believes" a Middle East peace agreement can be reachedthis year -- a deadline widely viewed as unrealistic.
Highly unpopular in the Muslim world because of the Iraqwar, Bush alternately prodded and encouraged Arab allies oneverything from oil to political reform, and urged them toisolate U.S. foes Syria and Iran for "supporting terrorism".
"We must stand with the Palestinian people, who havesuffered for decades and earned the right to a homeland oftheir own," Bush said at the end of a five day Middle Easttour.
Adjusting his approach from the one taken on his visit toIsrael for its 60th anniversary, Bush pressed Palestinians to"fight terror" and called on Israel to make "tough sacrificesfor peace and ease restrictions on Palestinians".
He was alluding to the hardship Palestinians face fromIsraeli roadblocks and barriers in the occupied West Bank,measures they call collective punishment but which Israel saysare to defend it against militant attacks.
Bush's more sympathetic words to the Palestinians, appearedaimed at countering Arab doubts, reinforced by his Israelvisit, about his ability to act as an even-handed peacebroker.
He had stoked anger in a speech to Israel's parliament onThursday in which he pledged unflinching support for the Jewishstate but made only one reference to Palestinians' statehooddreams.
Bush's call for Palestinian statehood drew the strongestapplause but his reception was mostly muted, a far cry from thehero's welcome he received in Israel.
After his speech to the conference, which was attended byArab leaders such as Egyptian President Hosni Mubarak andJordan's King Abdullah, Bush left for Washington.
Commenting to reporters on board Air Force One on theimpact of Bush's visit, Secretary of State Condoleezza Ricesaid: "This is really a two-speech trip, not a one-speech trip.
"Today (Bush) had a chance to elaborate on that vision forthe Palestinians."
THIRD VISIT TO REGION?
Despite little sign of significant advances toward peace onBush's second trip to the region this year, his nationalsecurity adviser, Stephen Hadley, insisted Israeli andPalestinian negotiators had been making "tangible progress",and he left the door open for a third presidential visit.
Rice also said Israeli and Palestinian negotiators wereprivately discussing an agreement and the talks wouldintensify.
Bush, who met Palestinian President Mahmoud Abbas in Sharmel-Sheikh on Saturday, sought broader regional support for thepeace process and urged Arab states to "move past their oldresentments against Israel".
Bush's trip follows a U.S.-hosted conference in Annapolis,Maryland, in November. Since then, talks have bogged down overIsraeli settlement expansion in the West Bank and violence inand around the Gaza Strip, where Hamas cross-border rocket firehas triggered a tough Israeli military response.
Left-wing Israeli deputy Yossi Beilin, involved in previousnegotiations with the Palestinians, said in a statement Abbashad told him he would consider resigning in six months if thePalestinians and Israel failed to reach a peace agreement.
"There is no point in continuing in that capacity if itbecomes clear there is no chance of achieving peace," Beilin'soffice quoted Abbas as saying when they met on the sidelines ofthe Egypt conference.
During his trip, Bush also urged Arab leaders to stand byLebanese Prime Minister Fouad Siniora against Hezbollah and toshun Iran over its nuclear programme. Iran says it wantsnuclear technology only for peaceful purposes.
He called on Arab governments to free all "prisoners ofconscience" and open up political debate.
"Too often in the Middle East, politics has consisted ofone leader in power and the opposition in jail," Bush said.
Reflecting concern over record oil prices during apresidential election year, Bush also warned Arab oil producerstheir supplies were limited and they must diversify theireconomies. His comments follow a visit to Saudi Arabia where hewon a modest increase in oil output.
(Additional reporting by Wafa Amr in Ramallah; Editing byAlison Williams)
