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Prime Minister Ehud Olmert praised the new peace initiative. Olmert spokeswoman Miri Eisin said the announcement Monday "adds to the momentum" of bilateral talks already under way between Olmert and Palestinian Authority Chairman Mahmoud Abbas, and that the summit could be "an excellent umbrella to support the moderate Palestinians and to give a real push" to the bilateral talks.

Eisin said Saudi Arabia and other Arab states that do not have diplomatic ties with Israel should take part in the conference.

Hamas, however, accused Bush of planning a "crusade" with the Palestinians as its target.

Speaking in Gaza, Hamas spokesman Sami Abu Zuhri accused Bush of outlining "a plot to launch a crusade against the Palestinian people."

In the special address Monday night outlining changes to his administration's Middle East policy, Bush also said the U.S. would provide the new PA emergency government with over $190 million in aid.

Secretary of State Condoleezza Rice is to lead the summit, which is planned for the fall, Bush said.

"In consultation with our partners in the Quartet - the European Union, Russia and the United Nations - the United States is taking a series of steps to strengthen the forces of moderation and peace among the Palestinian people," Bush said. The Quartet will convene in Lisbon on Thursday, and is expected to endorse the summit.

Bush administration officials are fairly sure they have some takers among the majority of Arab nations that still do not recognize Israel. The idea was first floated in a now-dormant peace proposal advanced several years ago by then-crown prince and now King Abdullah of Saudi Arabia.

"We wouldn't be launching ourselves on this enterprise if we didn't feel some confidence that there is a willingness in the region to embrace the path to peace," said Assistant Secretary of State David Welch, the State Department's top diplomat for the Middle East. "We believe that this is a moment for everybody to push the 'go' button and try and make this work."

Welch noted that just such a conference is specified in the Saudi-sponsored Arab peace plan, which gained some renewed attention this year. "That's at the heart of the Arab initiative, and we take them at their word," he said.

Bush continued in his speech: "This year we will provide the Palestinians with more than $190 million in American assistance, including funds for humanitarian relief in Gaza."

"Today I announce our intention to make a direct contribution of $80 million to help Palestinians reform their security services," the president added.

The $190 million is for the 2007 fiscal year, which ends September 30. The administration had already asked Congress for $86 million in aid for the Palestinians, and has promised to give the UN an additional $40 million mainly for residents of the Hamas-controlled Gaza Strip.

The president's speech was made several hours after Olmert hosted Abbas at his official residence in Jerusalem. Bush praised the meeting, and called on Olmert to continue to release Palestinian tax revenues to the PA government.

"Prime Minister Olmert has also made clear that Israel's future lies in developing areas like the Negev and Galilee - not in continuing occupation of the West Bank," Bush said. "This is a reality that Prime Minister Sharon recognized, as well." Bush urged Israel to remove unauthorized outposts, stop expanding settlements, and to "find other practical ways to reduce their footprint without reducing their security."

Fatah spokesman Nabil Abu Rudeineh said the PA welcomed Bush's speech. He told Haaretz that Bush's call to renew the peace talks reinforces the Palestinian position, which sees this as essential. He said the summit must lead to the implementation of the road map and the Arab peace plan - in other words, to the establishment of a Palestinian state.

Senior Palestine Liberation Organization official Yasser Abed Rabbo also praised Bush's speech, which he said would give greater weight to the talks between the Palestinians and the Israelis, and could push the talks away from the emphasis on gestures on the ground toward final-status talks. "It's not clear why Israel isn't ready to renew talks now," Abed Rabbo added.

Abbas adviser Nabil Amr said Abbas saw Bush's speech in Washington as "opening a new door that would lead to reviving peacemaking," a reference to final status issues such as the fate of Jerusalem, borders and Palestinian refugees.

Not everyone sees Bush's plan as practical. Anti-Defamation League Director Abe Foxman told Haaretz that the parties to the Arab-Israeli conflict must first arrive at a peace agreement, and only then hold an international conference to discuss ways and means to strengthen the peace. He said Bush's speech expressed a final attempt by the current administration to promote Middle East peace, and said that the president placed the responsibility on the PA and the moderate Arab states.