The task force, set up by the Council on Foreign Relations, said the US should support the evolutionary development of democracy in the Arab region and not seek to impose it by force.
Drawing on consultations with Arab thinkers, business leaders and reform activists, the task force - In Support of Arab Democracy: Why and How - urged the Bush administration to encourage Arab leaders to introduce reforms that "respond to specific demands for change made by citizens within each Arab country".
It also urged Washington to deal with the issue of terrorism without turning "a blind eye when Middle Eastern rulers use national security to justify the repression of non-violent Islamist organisations".
Lessons to learn
Commenting on the report, Albright said that while having organisations such as Hamas and Hizb Allah on the Bush administration's terror list, it "does not make sense to pretend they do not exist".
Albright said ignoring the popular
Hizb Allah was not prudent
Although she did not specifically advocate talking to those organisations "because that would be illegal", she said that "there are lessons to be learned from Hizb Allah".
"They certainly are popular and one reason is that they did get the Israelis out of southern Lebanon but also because they are very close to the people and, to use an American term, provide constituent services to them".
The task force concluded that President George Bush's diplomatic engagement in the peace process will help reduce Arab mistrust of US intentions, but also recommended that Washington "support democratic reform in the Middle East whether or not there is progress towards peace, and should support progress towards peace whether or not there is significant democratic reform".
On the issue of US portrayal in the Arab world and its repercussions for the democratic process in the region, the task force called on Washington to change its public diplomacy strategy by turning its Arabic language news channel, Al-Hurra, into "a C-SPAN-style format" and reviving the Voice of America Arabic service.
On the Bush administration's complaints that Arab news networks such as Aljazeera were biased, the task force warned US policymakers that, while it was appropriate to criticise what they saw as inaccurate coverage, "it is counter-productive for the US government to exert pressure on Arab governments to alter the content broadcast on these stations"
The full task force report can be found on the Council on Foreign Relations website http://www.cfr.org