WASHINGTON - U.S. National Security Adviser Stephen Hadley said Thursday it is difficult to see how Syria can fit into the renewed peace process.

"Syria is a state that supports terror, including Hezbollah and Hamas," Hadley told students in a speech at Johns Hopkins University's international studies school in Washington. He spoke just after Prime Minister Ehud Olmert headed home following the Middle East peace conference, held in Annapolis Tuesday.

Hadley said Syria's policy was not compatible with "what we've seen" at Annapolis.

He said Israel would be the one to decide whether to negotiate with Syria, but he left no room for doubt on the United States' position on this issue. Hadley said Syria must make a fundamental decision.

"There is a new spirit in the Middle East, a real chance for peace. Will Syria be left on the sidelines or give up its support for terror, leave Lebanon alone, support the Iraqi government and make a decision in favor of peace?"

If Syria takes this course it will have a chance for an agreement on the Golan Heights, but if it doesn't, "I don't see how it can be part of this process," he said.

Hadley implied that Syria's leaders had not shown the necessary fundamental change despite sending a representative to Annapolis. Syria sent its deputy foreign minister to the conference - a lower-ranking official than other countries sent.

President George W. Bush's opening statement reflected his dissatisfaction with Syria, whose invitation to the summit had raised a controversy in the administration. The only issue Bush addressed apart from relations between Israel and the Palestinian Authority was the situation in Lebanon.

Hadley said on Wednesday that "all those present, except one" - meaning the Syrian representative - had applauded after Olmert's speech at the conference.

However, Washington sources said that at the end of the conference Secretary of State Condoleezza Rice shook the Syrian official's hand and thanked him for his participation.

State Department Spokesman Sean McCormack said in his daily briefing that the Syrian representative's speech at the summit was "positive and constructive." But McCormack added that the Syrian channel was "a lot less ripe" than the Palestinian one, on which the administration was concentrating.

Hadley said that it was Bush's insistence on a policy of zero tolerance for terror that had created the opportunity for a renewed peace process in the Middle East. His speech defended Bush against critics who said he took too long before trying to resolve the Israeli-Palestinian conflict.

He said the new opportunity was created for several reasons, including Bush's policies of the last six years. Hadley reminded his audience that the world had been "in shock" when Bush decided to sever ties with Yasser Arafat and that Bush had supported former prime minister Ariel Sharon's efforts "to protect the Israelis from terror."

Hadley said Bush was not interested in just any Palestinian state but in one that would adhere to standards of democracy, freedom and a lack of terror. He reiterated that Bush did not believe in "forcing an American solution" on the two sides, stating that only the Israelis and Palestinians could reach agreements that both nations would accept.

Hadley also spoke about the connection that the Bush administration saw between solving the Palestinian problem and the general agenda of "advancing freedom in the Middle East."

He said that if the Palestinians make the right choice, their historians will look back on the 2006 parliamentary elections, in which Hamas gained power, as a pyrrhic victory, more of a mishap than a failure of Palestinian democracy.