Bush to propose Palestinian state - report

US President Bush's new Middle East policy will call for the early creation of a provisional Palestinian state and the completion…

US President Bush's new Middle East policy will call for the early creation of a provisional Palestinian state and the completion of negotiations over permanent borders within three years, The Washington Postreported today.

Citing US and diplomatic sources, the newspaper said President Bush will propose that the plan be adopted at a Middle East peace conference, tentatively set for September, provided there has been progress in revamping Palestinian security forces and reducing violence against Israelis.

The sources also said the three-year deadline for final settlement of the most difficult Israeli-Palestinian issues, including the status of Jerusalem, would be dependent on measurable benchmarks for both sides, the report said.

The Postsaid the sources did not indicate whether the Bush plan accepts Palestinian leader Mr Yasser Arafat as a main party to the negotiations, something Israel has dismissed.

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President Bush had been scheduled to unveil his Middle East policy today. But a much-anticipated speech was postponed after a Palestinian suicide bombing killed 19 Israelis yesterday in Jerusalem, the report said.

President Bush now plans to deliver the speech between tomorrow and next Monday, the Postsaid, citing sources.

"The general feeling was, you couldn't walk out in the Rose Garden tomorrow and talk about 'a peace proposal' given what happened," one source told the newspaper.

The Postquoted sources as saying the administration also wanted to see what Israel's response to the bombing would be.