President George W. Bush said today he saw a "great chance" of achieving an independent Palestinian state and pledged to work with European leaders toward that goal.
In a joint news conference at the White House with British Prime Minister Mr Tony Blair, Mr Bush said:
"I believe we've got a great chance to establish a Palestinian state and I'm prepared over the next four years to spend the capital of the United States to establish such a state".
He offered his condolences to Palestinians on the death of their veteran leader, Yasser Arafat.
President Bush warned that the violence in Iraq could get worse in the run-up to elections in January. "As those election draw near, the desperation of the killers will grow and the violence could escalate," he said.
The US-UK vision includes a "just and peaceful resolution of the Arab-Israeli conflict based on two democratic states, Israel and Palestine, living side by side in peace and security", Mr Bush continued.
"Our sympathies are with the Palestinian people as they begin a period of mourning," he said. "But the months ahead offer a new opportunity towards a lasting peace. "Soon the Palestinians will choose a new president. This is the first step in creating lasting democratic political institutions through which a free Palestinian people will elect local and national leaders.
"We are committed to the success of these elections and we stand ready to help. "I look forward to working with a Palestinian leadership that is committed to fighting terror and committed to the cause of democratic reform."
Mr Blair said the multi-national force in Iraq would overcome the difficulties in the way of the democratic, stable state that the country's people want.
Repeating his condolences to the Palestinian people on the death of Yasser Arafat, he said: "We meet at a crucial time where it is important that we revitalise and reinvigorate the search for a genuine, lasting and just peace in the Middle East."
Mr Blair set out a series of steps towards a two-state solution to the Israel-Palestine conflict, and stressed that no solution would be possible unless both sides were truly democratic and respected human rights within their borders.
Progress towards peace involved "first of all making sure that we set out a clear vision - that vision was articulated by President Bush some time ago and repeated by him today - of a two-state solution, two democratic states living side by side together in peace", said Mr Blair.
"The second thing is we need to support those Palestinian elections. That is the chance for the first beginning of democracy to take hold on the Palestinian side, so it's important we support it. "Thirdly, however, if we want a viable Palestinian state, we need to make sure that the political, economic and security infrastructure of that state is shaped and helped to come into being. We will mobilise international opinion and the international community in order to do that.
"The fourth thing is Prime Minister Sharon's plan for disengagement (from the Gaza Strip) is important... That disengagement plan is now going forward. It's important that we support it. "And then, on the basis of this, we are able in accordance with the principles of the Road Map, to get back into final status negotiations."
Mr Blair said: "I think there is every possibility that we can do this with the energy and the will and the recognition that in the end it is only if the two states that we want to see living side by side are indeed democratic states, where the rule of law and human rights are respected in each of them, that a lasting peace can be secured."
President George W. Bush lent support to European leaders trying to break a deadlock in talks with Iran over its nuclear program.
France, Britain and Germany are trying to get Iran to agree to suspend sensitive nuclear work to avoid a referral to the United Nations Security Council for possible sanctions.
"We don't want Iran to have a nuclear weapon and we're working toward that end," Mr Bush said. "And the truth of the matter is the prime minister gets a lot of credit for working with France and Germany to convince the Iranians to get rid of the processes that would enable them to develop a nuclear weapon."