Rhetoric and Reality: Bush's Battle for the Future of the Middle East

George Bush told the Annapolis summit yesterday that a battle was under way for the future of the Middle East as events on the ground underlined the difficulties ahead for Israeli-Palestinian peace talks that were relaunched after seven years.

Iran, on cue, said it had developed a new long-range ballistic missile, while thousands of supporters of the Islamist movement Hamas protested in Gaza, chanting "Death to America", "Death to Israel" and scorning the Palestinian president, Mahmoud Abbas, as a "collaborator". In the West Bank, Palestinian security forces shot dead a demonstrator.

Bush came to the US naval academy to portray his support for revived "final status" negotiations between Abbas and Ehud Olmert, Israel's prime minister, against the background of a broader regional struggle. "We must not cede victory to the extremists," he said.

In the Maryland winter sunshine, all was carefully choreographed. "Today, Palestinians and Israelis each understand that helping the other to realize their aspirations is the key to realizing their own, and both require an independent, democratic, viable Palestinian state," said Bush. "The time is right, the cause is just and with hard effort I know they can succeed."

Analysts say the key to any future peace process is the degree to which the US, EU and others will be prepared to intervene, hold the parties to their commitments, and bridge gaps when disagreements arise. It is far from clear that Bush is prepared to play that role.

Abbas restated key demands for the removal of Israel's West Bank settlements, roadblocks, the separation wall and the release of thousands of prisoners - all difficult for Olmert to implement while keeping his shaky coalition government together. "We need East Jerusalem to be our capital," Abbas said. War and terrorism "belong to the past". "Neither we nor you must beg for peace from the other. It is a joint interest ... Peace and freedom is a right for us, just as peace and security is a right for you and us," he added.

Olmert, who, like the Palestinian president, is facing powerful opposition at home, spoke to his own people as much to the other leaders. "I had many good reasons to refrain from coming to this meeting," he said. "I do not ignore all the obstacles which are sure to emerge along the way."

He denounced Palestinian terrorism and the Qassam rockets being fired from Gaza. Unusually, he also acknowledged the suffering of Palestinians "living in camps, disconnected from the environment in which they grew up, wallowing in poverty, neglect, alienation, bitterness and a deep sense of deprivation".

Expectations for Annapolis were kept so low that any vaguely positive achievement would have been impressive. But months of US-brokered diplomacy could not produce a promised joint declaration on the ultra-sensitive "core" issues that have to be negotiated - borders, settlements, Jerusalem and refugees.

Instead they announced, as expected, the immediate resumption of talks on creating an independent Palestinian state by the end of next year, when Bush is due to leave office. These are to be overseen by a permanent bilateral steering committee and will begin in earnest on December 12. The issues remain as tough and intractable as ever. "We agreed to immediately launch good faith, bilateral negotiations in order to conclude a peace treaty resolving all outstanding issues, including core issues, without exception," Bush said, reading the agreed statement.

The Annapolis conference was the biggest of its kind since the Madrid summit of 1991. The 14 Arab participants included Saudi Arabia, represented by its foreign minister, taking part in the kingdom's first public meeting with Israel.

"It is time to end the boycott and alienation toward the state of Israel," Olmert said.

"I have no doubt that the reality created in our region in 1967 will change significantly.

"While this will be an extremely difficult process for many of us, it is nevertheless inevitable. I know it. Many of my people know it. We are ready for it."