HIGHLIGHTS: Arafat Ignores Bush's Calls for New Palestinian Leadership|| Bush Stops Short of Mentioning Arafat By Name||Bush Says Israel Has to Ultimately Agree to Pull Back to Lines Before the 1967 Mideast War.|| STORY:
Yasser Arafat welcomed President Bush's Mideast policy speech Monday as a "serious effort to push the peace process forward," but ignored Bush's calls for new Palestinian leadership. (Read photo caption)

Israeli Prime Minister Ariel Sharon echoed Bush. A statement from his office said that "when the Palestinian Authority undergoes genuine reforms and a new leadership takes its place at its head ... it will be possible to discuss ways of moving forward by diplomatic means."

Senior Palestinian officials, however, insisted that only the Palestinian people, not Bush, could decide if they need to replace Arafat as their leader.

Saeb Erekat, an Arafat aide, said Bush's call to replace him was "not acceptable."

Erekat said Arafat won "free and fair elections" and "President Bush and others must respect this."

Arafat was elected president in 1996, winning 87 percent of the vote in an election that was part of interim peace agreements with Israel. His only opponent was Samiha Khalil, a 73-year-old social activist. She was never considered a serious challenger.

Bush said peace requires a new Palestinian leadership - one "not compromised by terror." He said "reform must be more than cosmetic changes or a veiled attempt to preserve the status quo" if the Palestinians are to fulfill their aspirations for a state alongside Israel. Bush did not identify Arafat by name in the speech.

As for the Israelis, Bush said they should withdraw to West Bank positions they held two years ago and stop building homes for Jews on the West Bank and in the Gaza Strip. Ultimately, he said, Israel should agree to pull back to lines before the 1967 Mideast war.

Sharon's statement said that "when the Palestinian Authority undergoes genuine reforms and a new leadership takes it place at its head... it will be possible to discuss ways of moving forward by diplomatic means."

In a statement, Arafat said the Palestinian leadership welcomes Bush's ideas "and finds them to be a serious effort to push the peace process forward."

"The Palestinian leadership and President Arafat hope that the details will be discussed during the direct and bilateral meetings with the American administration" and international mediators, the statement said.

In his speech, Bush said that when Palestinians have new leaders, institutions and security arrangements with their neighbors, Washington "will support the creation of a Palestinian state, whose borders and certain aspects of its sovereignty will be provisional until resolved as part of a final settlement in the Middle East."

Palestinian officials took heart from Bush's insistence that ending Israeli occupation is the only way to achieve peace.

Bush's speech was broadcast live throughout the Mideast on Arab satellite TV stations to a region that for weeks had been waiting for Bush to jolt Palestinians and Israelis out of their violent impasse.

Arab world academics and analysts condemned Bush's speech, with Syrian political analyst Imad Shueibi calling it "the worst speech in the history of U.S.-Arab relations." Mohamed el-Sayed Said, Washington bureau chief for the Egyptian daily Al-Ahram, said "the Arab world will not sleep tonight."

PHOTO CAPTION

Palestinian leader Yasser Arafat pauses during his meeting with the UN envoy Terje Larsen in the West Bank town of Ramallah, Wednesday June 19, 2002. President George W. Bush urged the Palestinians Monday, June 24, 2002 to replace Arafat with leaders "not compromised by terror" and adopt democratic reforms that could produce an independent state within three years. (AP Photo/Nasser Nasser)