Bush and Blair to discuss plans for UN approval of Iraq exit strategy

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George Bush put pressure on Israel yesterday to make concessions to revive the Middle East peace process, urging it to stop building the "security fence" it is erecting around the Palestinian territories.

In his keynote foreign affairs speech in London Mr Bush also demanded movement by the Palestinians and urged Europe's leaders to oppose "anti-Semitism".

In talks today with Tony Blair in Downing Street, the President will discuss a plan to table a United Nations resolution in the new year to approve an "exit strategy" from Iraq. The move will be seen as a significant change of course because it could give the UN a role in overseeing Iraq's provisional government. The resolution would also seek pledges of troops and reconstruction aid from other countries.

Mr Bush said the US would not pull out of Iraq until democracy was entrenched. "We did not charge hundreds of miles into the heart of Iraq and pay a bitter cost of casualties and liberate 25 million people only to retreat before a band of thugs and assassins," he said.

His strong words on the Middle East were seen as a concession to Mr Blair, who has been frustrated by the apparent "disengagement" of the Bush administration from the peace process. Blair aides welcomed yesterday's intervention as a sign that British pressure had paid off.

Mr Bush outlined his goal of "a viable Palestinian democracy", arguing that the Palestinian people had been betrayed by others for too long, including an "old elite" of their own leaders who intimidated opposition, tolerated corruption and maintained ties with terrorist groups.

He said there must also be security and peace for Israel, which had "lived in the shadow of random death" for too long. He added: "Israel should freeze settlement construction, dismantle unauthorised outposts, end the daily humiliation of the Palestinian people, and not prejudice final negotiations with the placements of walls and fences."

Israel's fence threatens the "two-state solution" favoured by the US by keeping settlements on the West Bank on the "Israeli" side. The two-state plan was endorsed unanimously by the UN Security Council yesterday.

Mr Bush foreshadowed a harder stance on Saudi Arabia and other Arab states by warning: "We will consistently challenge the enemies of reform and confront the allies of terror. We will expect a higher standard from our friends in the region."

He outlined the "three pillars" of his foreign policy. The first was international organisations that must be equal to the challenges facing the world. He said the UN was an effective instrument of collective security but warned: "The credibility of the UN depends on a willingness to keep its word and to act when action is required."

The second pillar was the willingness of free nations to restrain aggression and evil by force. "In some cases, the measured use of force is all that protects us from a chaotic world ruled by force." In a sideswipe at France and Germany, he said: "Because European countries now resolve differences through negotiation and consensus there is sometimes an assumption that the entire world functions in the same way. But let us never forget how Europe's unity was achieved: by Allied armies of liberation and Nato armies of defence."

The third pillar was the global expansion of democracy: "We cannot rely exclusively on military power to assure our long-term security. Lasting peace is gained as justice and democracy advance."

Mr Bush praised Mr Blair for his support and said the British and American peoples were united in an "alliance of values". He concluded: "The men and women of this kingdom are kind and steadfast and generous and brave. And America is fortunate to call this country our closest friend in the world."