His outspoken views will cause fury among the Bush Administration which wants to maintain overall control of the occupied country.
“We should play a role and spend a lot of money there, but we shouldn't dominate,” Clinton said during a brief visit to the United Arab Emirates, Reuters reported.
“What we need is for the UN to nominally supervise the security situation and NATO to be used as an instrument,” he said during a question-and-answer session at the American University of Dubai, where he launched a scholarship programme.
“This will enable us to spread both the responsibility and the risks and make it look less like an occupation," he added.
The US is currently trying to push through a UN resolution to get help in Iraq.
"Israel ought to be prepared to give up the West Bank and East Jerusalem"
US troops, under daily attack by resistance fighters, are demoralised and increasingly prone to making mistakes such as the so-called “friendly-fire” incident in Fallujah last week which claimed the lives of 10 Iraqi policemen.
Both France and Germany have argued that a US-written draft resolution does not cede enough control to the United Nations.
Clinton also focused on the Palestinian question, urging Israel to be prepared to make major concessions if it wanted peace. He said they must be prepared to give up Palestinian territories occupied since the 1967 war.
“Israel ought to be prepared to give up the West Bank and East Jerusalem. International forces should be invited to enforce agreements and see through a transitional period,” Clinton said.