"It really is time for Syria to realise that it is clearly out of step with where the region is going," Rice said on Friday after meeting Iraq's Minister of Planning Barham Saleh in Washington.
"This is a Syria that needs to understand that it should not think itself immune from the way that the region is going."
The Bush administration has set itself a target of spreading democracy in what it calls the Greater Middle East.
"This is a power, Syria, which has begun to move its forces from Lebanon, which was standing in the way of a free Lebanon, a Syria that is supporting Palestinian rejectionists at a time when the Palestinians and Israelis are trying to find their way to a two-state solution that would clearly serve the interest of the Palestinian people, and a Syria that is allowing its territory to be used to organise terrorist attacks against innocent Iraqis," Rice said.
She said the US government was concerned "in particular about Syrian behaviour on its own border, about the support for terrorists that appears to be taking place from Syrian territory, about perhaps financial support that is coming from Syrian territory".
"Neighbours should remember that stability in the neighbourhood is going to be good for the neighbours as well as for the people of Iraq.
Rice (R) made her Syria remarks
after meeting Saleh (L) in the US
"This is a historic but difficult time, and neighbours must do everything that they can to support the processes in Iraq," Rice said.
The Iraqi minister Barham Saleh also made a veiled criticism of Syrian actions.
Syria seeks cooperation
"The new Iraq wants to be at peace with the neighbours of Iraq and they should welcome that," he said.
"Some of the neighbours have been cooperating and have been true to their commitments to the government of Iraq. But I would say that some other neighbours need to do better and need to be more serious about the commitments that they declare."
For its part, Syria issued a statement on Saturday denying "US accusations" and expressing its willingness to cooperate with Iraqi authorities to control the shared border
Calls for reform
Meanwhile, Asma Al-Assad, the wife of the Syrian president, called on leaders in her country to implement what she termed more far-reaching political and institutional reforms.
Syria needs to introduce political and institutional reforms to attract foreign investments necessary for the economy to flourish, Asma al-Assad, said at the Woman in Business International Forum, which opened in Damascus on Saturday.
Syria's Asma al-Assad says more
reforms are needed
"Syria is shaping its business environment for today's global economy. This means major change at a sustainable pace, introducing the reforms necessary for a dynamic and prosperous enterprise economy," she told delegates attending a women's conference in Damascus.
The two-day forum aims at activating the role of women in
society. More than 2000 delegates from more than 40 countries, including the United States, are attending the meeting.