Rice defends Bush's initiative for Mideast

Palestinian rep to U.N. urges U.S. to move slowly on Arafat

National Security Adviser Condoleezza Rice said President Bush's Mideast peace plan calls on both sides to make changes.

WASHINGTON (CNN) -- U.S. National Security Adviser Condoleezza Rice defended President Bush's Middle East peace initiative Sunday, including his call for new Palestinian leadership.

"Until there is a changed dynamic in the situation in the Middle East, until there is a leadership that will resolutely fight terror, deal with the needs of its people and be a negotiating partner for Israel, it's not going to be possible to move forward," Rice said on CNN's "Late Edition With Wolf Blitzer."

Rice went as far as to say that Secretary of State Colin Powell has likely held his last official meeting with Palestinian leader Yasser Arafat.

For his part, Powell told "Fox News Sunday," "At the moment, we are not dealing with him [Arafat]. We believe that the leadership he has provided to the Palestinian people has been inadequate."

Nasser al-Kidwa, the Palestinian observer to the United Nations, said the United States shouldn't be hasty about removing Arafat from power.

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"For him, and I think for many Palestinians as well, it's a matter of a mission rather than a post," al-Kidwa said on NBC's "Meet the Press." "His [Arafat's] mission is to lead the Palestinian people until the establishment of an independent Palestine."

Al-Kidwa also revealed a Palestinian view of Arafat that is not widely known.

"After that [the establishment of an independent Palestine], by the way, the question will be very legitimate because many Palestinians also think that he might not be the man to build the modern institutions of the state," al-Kidwa said.

Al-Kidwa predicted Palestinians will back Arafat in the immediate future, saying he symbolizes the ambitions of the people while they are in the phase of "national liberation."

Concern about settlements cited

Bush unveiled his framework for Mideast peace in a major speech last week, calling on new Palestinian leadership without mentioning Arafat by name.

When asked why Bush had changed course and established a new direction in the pursuit of peace, Rice said, "This administration has tried with the current Palestinian leadership to make progress.

"But all that we've gotten in return is continued activities that support and encourage terror," she said. "Eventually, you have to say that it is time for a new dynamic, time for change."

Rice declined to speculate on who might emerge as candidates in Palestinian presidential elections, to be held between January 10 and 20, saying only that new leaders would come forth in a truly democratic process.

She emphasized that free and fair elections begin with allowing opposition to organize and gain access to media to express opinions and goals.

Rice also said the Bush administration increasingly is concerned about Israeli occupation of Palestinian-controlled lands.

"Nobody wants the Palestinian people to continue to live in squalor and occupation. The occupation needs to end, the Israeli occupation," she said. "It will eventually undermine the identity of Israel as a democracy. Israel needs this occupation to end."

Palestinians have criticized the Bush speech, saying it offered no specifics. Rice said the president laid out "a broad political vision that begins with Palestinian reform but doesn't end there."

She insisted the Bush initiative calls on both sides to make changes.

Making it clear the Bush administration believes the Palestinian Authority has misspent funds, Rice said serious financial reforms must be forthcoming from the Palestinians for them to receive U.S. financial aid.

As far as cutting aid to Israel, Rice told NBC, "It's a stick that's not on the table."

Nevertheless, Rice said that Israel has a lot of responsibilities to carry out, the most important of which is the restoration of freedom of movement for Palestinians. She said this easing of restrictions on Palestinian movements would be a priority in discussions with Israel.

"We are very concerned that the Palestinian people are not able to work," she said. "We're very concerned that they're not able to move freely in their towns."