June 26, 2002

KANANASKIS, Canada — At the summit of the world's seven richest nations plus Russia, President Bush turned to Mideast politics, saying that new leaders are needed among the Palestinians if change is to occur.

"I meant what I said that there needs to be change. If people are interested in peace, something else has got to happen," Bush said during a Wednesday press conference with British Prime Minister Tony Blair. "We're mired in a situation now where there is terror on the one hand and hopelessness on the other and that's unacceptable."

The G-8 Summit was supposed to focus on concerns about Russia's nuclear stockpile and security on the U.S.-Canadian border, but the Middle East has been at the top of the list of unofficial topics in part because the president, without mentioning Palestinian leader Yasser Arafat by name, said in a Rose Garden speech on Monday that the Palestinian leadership has got to go.

He repeated those assertions Wednesday, again focusing on an appeal to the Palestinian people themselves.

"The status quo is simply unacceptable and it ought to be unacceptable to (the Palestinians). They've been pawns in the name of peace. They have no hope. Their economy is in shambles. They live in squalor. Their leadership has let them down."

Palestinians are now scheduled to vote on a new president in mid-January.  Arafat will be a contestant in that race. 

The Bush administration revealed this week that the president's decision to exclude Arafat from future peace negotiations was a response to reports from Israeli intelligence that Arafat gave $20,000 to a group that sponsors suicide bombers.  The Al Aqsa Martyrs Brigade, which received the payment, claimed responsibility for one of two suicide bombings in Jerusalem last week.

The administration has put on hold a trip Secretary of State Colin Powell was supposed to make, and U.S. diplomats want to hear from Arab governments what they think should be done next in the peace process.  Moderate Arab nations Jordan and Egypt both expressed positive reaction to the president's Monday speech.

Behind the scenes, Bush and his administration are working to build support for the proposal among Western allies, but have faced resistance on some fronts. 

Canadian Prime Minister Jean Chretien was pigeonholed on the topic Tuesday night, and delivered an ambiguous answer in response.

"The president talked about perhaps it will be better to replace Mr. Arafat. I don't have the specific point of view on that. I think it might be a good thing; I don't want to comment on that. But I just say that we need quick election there and to produce the best leadership... and it's very important to have a constitution and a real state alongside Israel that has to be secure and well-protected," he said.

European leaders have been more demonstrative in their support for continuing negotiations with Arafat, but Blair, who has met with Arafat more than two dozen times in the past few years, revised an earlier statement in which he said it is up to the Palestinians to decide who leads them.

"It is for the Palestinians to elect the people they choose to elect, but if we're going to make progress we need people who we can negotiate with who are serious about negotiating around the issues of security, of political reform necessary for the peace process to work," Blair said Wednesday. "If in the end you want as we want an Israeli state that is confident about its own security and a viable Palestinian state, those are the preconditions."

As all topics go back to terrorism, Bush said that he is "never ruling out military action" when it comes to stopping terrorism, but that diplomatic pressure may have more effect in the Mideast.

"The road map I've laid out is one that calls upon all our friends and allies to join and bind together against terror. It calls upon the Arab nations to step up and firmly reject terror," Bush said. "We all have responsibilities, and in this case the tool I'm using is diplomatic pressure and to work with our friends and allies to convince all parties they have a responsibility to bear."

http://www.foxnews.com/story/0,2933,56297,00.html