Egypt said Friday that Israel should approve in principle the 2002 land-for-peace Saudi peace initiative before negotiations with the Palestinians could begin.

"Israel must announce first that it is accepting the initiative, then we start searching for a mechanism of negotiations, for a peaceful settlement for the conflict," said Egyptian Deputy Foreign Minister Hani Khalaf.

The Arab plan offers Israel recognition and peace in return for full withdrawal from the land Israel captured in the 1967 Six Day War, plus the establishment of an independent Palestinian state with East Jerusalem as its capital. It also calls for allowing Palestinian refugees the right to return to homes in Israel.

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The plan, first proposed at the Beirut Arab Summit in 2002, is expected to be revived at the upcoming Arab Summit later this month in Riyadh, the Saudi capital.

Israel initially rejected the plan, and is particularly opposed to its granting the right of return to Palestinian refugees and their descendants.

However, Prime Minister Ehud Olmert said on Thursday that the plan could provide a convenient basis for renewed talks with Arab moderates. His remark was seen as indicating a tentative interest in the initiative after the failure of other avenues toward peace. The Egyptian official hinted that if Israel accepted the plan in principle, negotiations could begin on its specific points.

"Israel should not make any requests to reformulate the initiative before negotiations, as the process of negotiations in itself will bring modifications," Khalaf said.

Meanwhile, Arab diplomats say the United States has been pushing for changes to the Arab plan to make it consistent with the road map, a peace plan supported by the United States and other members of the Quartet of Middle East peace negotiators - the United Nations, the European Union and Russia. The road map calls for a two-state solution but falls short of specifying border lines for the proposed Palestinian state.

Khalaf said Arab parties would listen to that vision, but would also focus on marketing the Arab plan to the United States.

Egypt dismisses U.S. criticism of upcoming reforms
The Egyptian government dismissed on Saturday U.S. criticism
of Monday's referendum on constitutional changes, saying only Egyptians had the right to state their opinion on the subject.

U.S. Secretary of State Condoleezza Rice said on Friday that she was concerned and disappointed by the constitutional changes, which human rights and Egyptian opposition groups have called a step away from freedom and democracy.

Rice is arriving in the south Egyptian town of Aswan later on Saturday for a meeting with Arab foreign ministers.

Egyptian Foreign Minister Ahmed Aboul Gheit said: "Only the Egyptian people have the right to say their views on that referendum. ... If you are not (Egyptian), then thank you very much. It's our own development, our own country."

He was speaking at a joint news conference with U.N. Secretary-General Ban Ki-moon after talks between Ban and Egyptian President Hosni Mubarak

Rice said the United States had hoped Egypt would be in the lead "as the Middle East moves toward greater openness and greater pluralism and greater democratization".

"It's disappointing that this has not happened," she added.

The constitutional changes make it harder for the largest opposition group, the Muslim Brotherhood, to compete with the ruling party, which has been in power in various guises since the overthrow of the monarchy in 1952.

They enhance the powers of the president, enshrine in the constitution a ban on parties based on religion and give the authorities wide powers of arrest and surveillance.

A U.S. campaign for democracy in the Arab world peaked in about 2005 but analysts say the momentum diminished when the Bush administration realised it had serious problems in Iraq.

Aboul Gheit said: "Egypt and the United States are friends and we maintain the best of good relations. However, internal Egyptian affairs are an Egyptian affair and nobody else has the right to say anything."