Such a state will provide Palestinians with the chance to lead lives of freedom, purpose and dignity. And such a state will help provide Israelis with something they have been seeking for generations: to live in peace with their neighbours."

'Time right'
 
Bush told delegates from more than 50 countries and organisations: "In light of recent developments, some have suggested that now is not the right time to pursue peace. I disagree.
 
In depth

"I believe that now is precisely the right time to begin these  negotiations - for a number of reasons."
 
He said: "The time is right because a battle is under way for the future of the Middle East - and we must not cede victory to the extremists."
 
And in remarks that struck a sensitive Palestinian nerve, Bush said "the United States will keep its commitment to the security of Israel as a Jewish state and homeland for the Jewish  people".
 
"This settlement will establish Palestine as the Palestinian homeland, just as Israel is the homeland for the Jewish people."
 
More talks planned
 
The first peace talks are to be held on December 12 and are to continue biweekly after that, Bush said.
 
He was followed at the podium in the memorial hall of the naval academy by Mahmoud Abbas, the Palestinian president, and Ehud Olmert, the Israeli prime minister.
 
Annapolis analyses

Al Jazeera correspondents review opening speeches

Abbas laid out some core issues in his speech.
 
"Tomorrow, we have to start comprehensive and deep negotiations on all issues of final status, including Jerusalem, refugees, borders, settlements, water and security and others," he said.
 
He expressed the Palestinians' desire for East Jerusalem to be the capital of "our state".
 
Abbas said: "The exceptional opportunity that the Arab, Islamic and international prescience brings us today coupled with overwhelming Palestinian and Israeli public opinion in support of Annapolis, must be seized in order to be a launching pad for a negotiations process."
 
'Painful compromise'
 
Olmert, for his part, reached out to Arab delegates by using the Arabic phrase for "welcome".
 
"I have no doubt that the reality created in our region in 1967 will change significantly," he said.
 
"While this will be an extremely difficult process for many of us, it is nevertheless inevitable. I know it. Many of my people know it. We are ready for it."
 
Olmert said: "We want peace. We demand an end to terror, incitement and hatred. We are willing to make a painful compromise, rife with risks, in order to realise these aspirations."
 
The issue of Jewish West Bank settlement building was not mentioned by him.

Months of diplomacy
 
The first major Israeli-Palestinian conference in seven years got under way on Tuesday in Annapolis in the state of Maryland after months of diplomacy.
 
Bush hopes the conference can prepare the way for a peace deal between Palestinians and the Israelis and the establishment of a Palestinian state by the end of his second term of office.
 
But many Middle East politicians and demonstrators have said the talks have little chance of success.
 
Al Jazeera's Jacky Rowland said Palestinians were sick and tired, and feeling pessimistic.
 
"Here ... people are living under siege [with] air strikes and tanks shells fired into Gaza in the last 24 hours, and they feel what is happening in the US has nothing to do with them at all.
 

"They feel they have no future of Gaza and they need to get out, but they cannot, because they are locked in by Israel."

No framework

 

Al Jazeera's Nour Odeh said that clarity was lacking about what the parties were hoping to get out of the conference.

 

Most commentators expect little to come out
of the meeting beyond the handshakes [AFP]

"We are not really certain what will come out of Annapolis ... There isn't even an agreement on the framework between Palestinians and Israelis," Odeh said.


"They haven't been able to agree on what they will discuss in Annapolis or what they will do the day after Annapolis which many people are saying is more important than Annapolis itself."

 

Meanwhile, in the occupied territories, the situation was tense.

 

A Palestinian demonstrator was killed and dozens of others injured at an anti-Annapolis rally in the West Bank when clashes broke out between security forces and Hamas supporters.

 

Medics said the 35-year-old killed in Hebron had been shot in the chest and 16 others were injured on Tuesday as Palestinian security forces tried to disperse the protest.

 

Palestinian police also beat a number of journalists and cameramen during a protest march organised by the Liberation Party in Ramallah.

 

Wael al-Shiyukhi, Al Jazeera's correspondent, was among those injured.

 

Medics said they treated four people and a Reuters journalist said he saw at least 30 people being arrested in Ramallah.

 

In Gaza City too, tens of thousands of Palestinians poured on to the streets with the full blessing of the Hamas authorities who condemned Arab governments for participating in the Annapolis conference.

 

"They can go to thousands of conferences and we will still say in the name of the Palestinian people that we do not accept," Mahmud al-Zahhar, a senior Hamas leader, told the assembled crowd.