Powell declares US support for a Palestinian state

The US yesterday formally and for the first time acknowledged the objective of establishing an independent Palestinian state and Washington pledged to re-engage itself wholeheartedly in the Middle East peace process.

In a much-anticipated speech at the University of Louisville, Kentucky, the US Secretary of State, Mr Colin Powell, called on both Israel and the Palestinians to return to the negotiating table and promised to dispatch a new special envoy, former Marine General Anthony Zinni, to the region to broker peace talks.

"As we have for half a century, the United States is ready to play an active leadership role in helping the parties along the road to a more hopeful future," Mr Powell said. And he warned the Palestinians that terrorism must stop and stop now".

He said the US was also willing to contribute to a third-party monitoring group in the event of a ceasefire being agreed.

Seeking to reassure Israel, Mr Powell, reminded its people that for 50 years the US had been its best friend, "bound together by common values and traditions. This will never change". He spoke in a language that clearly evoked the spirit and rhetorical repetition of Martin Luther King's "I have a dream" speech, Mr Powell said: "We have a vision of a region where two states, Israel and Palestine, live side by side within secure and recognized borders."

That vision seemed far away today, he said, but with "hard work, common sense . . . and a willingness of all to compromise" it was achievable.

Palestinians would have to accept the legitimacy of the Israeli state, he suggested, and "Israel must be able to live free from terror". They had to understand that violence had had a severe impact, feeding doubts among Israelis about whether the Palestinians really wanted peace, Mr Powell said. "The intifada is now mired in the quicksand of self-defeating violence and terror directed against Israel," he stated.

He called for a "100 per cent commitment" to fighting terrorism, and the arrest and punishment of those involved in attacks on Israelis. "No remembered wrong can ever justify the killing of innocents," he said. "Terrorism must stop and stop now."

But "Palestinians must also be secure", he told Israelis. Occupation, with its "checkpoints, raids and indignities", had become a defining part of their lives, he said, calling for an Israeli withdrawal from the villages they have recently taken and insisting that "settlement activity must stop".

The US would commit itself to do all it can to "push, prod and suggest" but "the only lasting peace will be the peace the parties make themselves". They had a roadmap in the form of the agreements brokered by former Senator George Mitchell and the CIA head, Mr George Tenet, he said, urging both sides to re-engage.

Administration sources admit that they do not necessarily see an opportunity at the moment but say the US needs to be seen to be more active in promoting a settlement. Persistent pressure has been applied by moderate Arab allies in the coalition against terrorism.

The move comes as a sharp about-turn in administration policy - Mr Bush was elected on the pledge of a hands-off approach to the Middle East, promising to get involved only when the parties struck a deal, and many Republicans complained at what they saw as Clinton tinkering.

The speech was due to have been delivered in September at the UN General Assembly but was delayed by the attacks on the World Trade Centre and the Pentagon on September 11th.

Mr Powell also took the opportunity yesterday to pledge US global economic leadership, arguing that America had the power to lift millions from poverty.

He welcomed the recent accession of China and Taiwan to the World Trade Organisation and last week's Qatar launch of a new world trade round.

But, seeing a political battle ahead, he warned Congress that the President "badly needs" what is known as "trade promotion authority", the right to insist that Congress votes on a whole negotiated package rather than on its individual parts.

This is seen as crucial to any chance of a World Trade Organisation agreement getting approval by the United States.