Rice urges Israel to do more for Palestinians

With time running out on the Bush administration's plan for a Mideast peace framework this year, Rice made essentially the same twin challenges to Israel and the Palestinians that she has made on more than 20 largely fruitless trips to the region during her tenure: Israel should loosen its grip on the West Bank and the Palestinians should tighten their rein on militants.

Rice also said as she has many times before that Israel should stop building new homes for Jewish settlers in disputed territory. She pledged to use her remaining three months in office to work toward a peace deal.

"The parties need to redouble their efforts," Rice said in an address to a Palestinian investment forum at the U.S. Chamber of Commerce headquarters in Washington.

Palestinians must continue to "dismantle the infrastructure of terrorism and to promote an atmosphere of tolerance."

"Israel must also halt settlement activity which can be seen as prejudging the outcome of negotiations and undermining its negotiating partner," she said.

"And while there have been some lowered restrictions to access and movement, more progress needs to be made in order for Palestinian businesspeople and workers to be able to conduct business in an environment in which they can thrive," Rice told the audience, which included Palestinian Prime Minister Salam Fayyad.

Rice's remarks inviting business investment in the West Bank largely ignored the many complications that have effectively put a peace pact out of reach for now: President Bush's dwindling time in office, preoccupation with internal politics in both the United States and Israel, the global financial crisis, and the now-entrenched split in Palestinian leadership.

Her comments came after Israeli Prime Minister-designate Tzipi Livni's Kadima Party initialed a partial agreement on bringing the Labor Party into a new governing coalition, a first step in forming a new government that some fear has distracted from the peace process.

Livni, currently foreign minister, has been the chief Israeli negotiator in talks with the Palestinians that began last November at the U.S.-hosted Annapolis conference with the goal of reaching an agreement by the end of 2008.