AP Diplomatic WriterWASHINGTON (AP) -- President Bush urged the Palestinians Monday to replace Yasser Arafat as their leader and adopt "a practicing democracy" that could produce an independent state within three years.
"Peace requires a new and different Palestinian leadership so that a Palestinian state can be born," Bush said at the White House.
In his long-anticipated speech, Bush said "reform must be more than cosmetic changes or a veiled attempt to preserve the status quo" if the Palestinians are to fulfill their aspirations for a state alongside Israel.
Elections should be held by the end of the year for a legislature with normal authority and there also must be a constitution, Bush said as he set stiff conditions for a Palestinians state.
"When the Palestinian people have new leaders, new institutions and new security arrangements with their neighbors, the United States of America will support the creation of a Palestinian state, whose borders and certain aspects of its sovereignty will be provisional until resolved as part of a final settlement in the Middle East," Bush said.
Senior administration officials said they envision the Palestinians being able to reach provisional statehood within 18 months and full permanent statehood in as soon as three years.
"With a determined effort, this state could rise rapidly -- as it comes to terms with its neighbors on practical issues, such as security," Bush said.
Israel also has a large stake in the success of a democratic Palestine, he said. "A stable, peaceful Palestinian state is necessary to achieve the security that Israel longs for," Bush said.
Touching delicately on the thorniest issues, the president said Jerusalem's future and the plight of refugees must be addressed. But he offered no prescription.
"You have lived too long with fear and funerals," he said.
Addressing the Palestinian people, Bush said he understood how they could feel like pawns in the Middle East conflict. "You deserve democracy and the rule of law," he said. "You deserve a life for your children and an end to occupation."
The president made his remarks in an afternoon speech in the Rose Garden, where he had announced in April that his administration would try to mediate the Israeli-Palestinian crisis. Bush leaves Tuesday for a meeting in Canada with leaders of the world's other major industrialized democracies.
Secretary of State Colin Powell, Secretary of Defense Donald H. Rumsfeld and Condoleezza Rice, the president's national security adviser, stood alongside the president in stifling early summer heat. Bush and his advisers staked out a shady area.
Bush also demanded that Israel withdraw to positions it held on the West Bank two years ago and to stop building homes for Jews on the West Bank and in Gaza. Ultimately, he said, Israel should agree to pull all the way back to the lines it held before the 1967 Mideast war.
Terms of a provisional state and its international functions were left for negotiations between a reformed Palestinian leadership and Israel.
Bush said the United States, European Union, World Bank and International Monetary Fund stand ready to help oversee reforms in Palestinian finances.
"And the United States, along with our partners in the developed world, will increase our humanitarian assistance to relieve Palestinian suffering," he pledged.
Powell already was in consultation with Arab and Palestinian officials as the Bush plan was developed and is likely to return to the region for direct talks, a senior administration official said.
Bush will discuss his initiative with leaders of industrialized democracies at a G-8 meeting this week. Meanwhile, with intense conflict in the Middle East, the idea of a peace conference is being put on hold, another senior official said on condition of anonymity.
In the meantime, the administration renewed its support for Israel's self-defense, even as Israeli tanks encircled Arafat's badly damaged headquarters in Ramallah, on the West Bank, and Israel went on the offensive against Hamas militants in Gaza.
"Israel has a right to defend itself," State Department spokesman Richard Boucher said. He also repeated the standard admonition that "everybody has to be aware of the consequences of their actions."
Within the Bush administration, there had been reservations about announcing a plan for Palestinian statehood. Some officials questioned going ahead while Israel was smarting from terror attacks and had its forces on the offensive. Others were skeptical that Arafat could harness the Palestinian militants who brought the region to a boil with suicide bombings.
On April 4, Bush became the first president to endorse statehood for the Palestinians. Yet he has shunned Arafat and has questioned his leadership and his motives repeatedly.
The limited statehood possibility irked some Palestinians and other Arabs.
"A state is a state, and you cannot be provisionally pregnant, and you cannot have a provisional state," Nabil Shaath, a senior member of Arafat's Cabinet, said Sunday on CNN's "Late Edition."
------On the Net: State Department's Near East desk: http://www.state.gov/p/nea/
Major events in Israeli-Arab history: http://www.mideastweb.org/history.htm