Moussa warned that the Arab League could take "painful decision regarding the Arab position towards peace negotiations".
He said: "Does that mean that the peace option is no more feasible? Yes, this is a possible position."
Moussa wanted Arabs to reconsider their options on Israel and the current negotiations if no progress is seen in the next few weeks.
He urged them to take a firm and decisive position on Israel and called on Arab foreign ministers to meet in mid-2008.
"Arab people are yearning for stability and refuse to suffer because of Arab differences. We are suffering form a crisis of confidence."
The Syrian president, in his opening speech to the summit, said he wanted to focus attention on the conflict with Israel, calling for Arab dialogue to resolve their differences.
"The Arab world has given Israel chances but we have not seen any reciprocation to the Arab Initiative," Al-Assad, said.
He also denied intervening with Lebanese affairs and stressed for sovereignty in the country that has been without a president since Emile Lahoud's term ended in November.
On Friday, Fouad Siniora, the Lebanese prime minister, gave a televised speech blaming Syria for the political crisis in his country.
"Lebanon has had a presidential void for more than four months," he said.
"Before and during that period Syria played a leading role to exacerbate the crisis ... interfering in Lebanon's internal affairs and blocking the election of the consensus candidate to the presidency."
|"Syria cannot be isolated. Whoever is absent is only isolating themselves" |
Yousef Ahmed, Syria's ambassador to the Arab League
Siniora also urged Arab League foreign ministers to hold a special meeting as soon as possible to help repair Lebanese-Syrian relations.
He said his government was keen on establishing diplomatic relations with Damascus.
"The Lebanese government stresses once again its desire to establish healthy, brotherly relations with Syria based on mutual respect for each other's sovereignty and independence," he said.
He said that the border between the two countries needed to be clearly defined and called on Damascus to co-operate with the Lebanese government in dealing with the disarmament of factions operating outside Palestinian refugee camps in Lebanon.
Lebanon has been mired in a political crisis for over a year due to political feuding between the government, backed by the West, and the Hezbollah-led opposition, which is backed by Syria and Iran.
Damascus has played down the absence of some Arab leaders at the summit.
"Syria cannot be isolated. Whoever is absent is only isolating themselves ... most of the Arabs are here," Yousef Ahmed, Syria's ambassador to the Arab League, said.
Leaders from Algeria, Comoros, Kuwait, Libya, Mauritania, the Palestinian Authority, Qatar, Sudan, Tunisia, and the UAE are taking part.
The summit is intended to discuss crises across the Arab world, including in Lebanon, Israeli-Palestinian negotiations, a power struggle between Fatah and Hamas and the continuing violence in Iraq.
But the decision by some member countries to not attend or to send only low-level delegations could undermine the meeting.
Moustafa Dabbas, a US-based Arab journalist, told Al Jazeera: "The west pressures some Arabs not to come because they want [the] summit to fail. I don't think [it will], the summit will win."
The US last week called on its Arab allies to think carefully about attending the summit, accusing Syria of blocking the election of a president in Lebanon.