a Palestinian state with provisional borders, under condition that it will be lead by a new Palestinian leadership.

Speaking in front of the White House where he outlined his much delayed peace plan, Bush suggested that Palestinian leader Yasser Arafat should leave.

"Peace requires a new and different Palestinian leadership so that a (final) Palestinian state can be born," within three years he said. "I urge the Palestinians to elect new leaders," in local elections he wants by the end of this year, followed by a Parliamentary ballot.

TERRORISM

He stressed that "Palestine" requires leaders who take terrorism seriously and stop shipments of arms from Iran which he said were intended to support extremist groups including Hamas. It was a reference to a recent shipment of Iranian arms allegedly intended for the Palestinian territories, which was intercepted by Israeli forces.

"My vision is two states living side by side in peace," said President Bush, talking about a future Palestine and Israel. Bush made clear however that a Palestinian state should be based on "a new constitution" that would give ministers "more powers of their own."

He added that it was time for more democracy with an independent judiciary and parliament.

BATTERED BUNKER

The US president spoke as Arafat was once again holed up in his battered bunker in the Palestinian town of Ramallah, surrounded by Israeli tanks as part what Israel calls a military operation to  combat terrorism. Elsewhere, 6 people were killed and 9 wounded when Israel attacked what it said was a militant leader in Gaza.

There was no immediate reaction from the Palestinian leader to the  Bush speech, although his chief negotiator Saeb Erakat already criticized it. "I think the issue is that Palestinians need to be free from occupation. They (the Israeli’s) couldn’t care less if it is lead by Atilla the Hun or anyone else."

Although President Bush said that Israeli’s had the right to live  "without funerals" and fear, Israel should eventually withdraw to the pre-1967 borders, based on several United Nations resolutions. He also made clear that Israel should stop settlements activity in the Palestinian territory.

SPEECH PRAISED

Despite the criticism towards Israel as well, former Israeli Prime Minister Ehud Barak praised the speech. But he also warned that US Secretary of State Colin Powell will now have to convince other powers, including the European Union and Russia "otherwise Arafat will use that" for his own purposes.

Under the Bush peace plan the international community, such as the EU and the International Monetary Fund, will be involved in giving more aid and advice to the Palestinians, as they prepare for the planned transition towards internationally recognized statehood.

However he made clear that "the US will not support a Palestinian state until the fight against terror is taken seriously." He added: "The Bible says that: I have set before you life and death. Therefore choose life…" This biblical hope he suggested was more than ever actual for the troubled Middle East.

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