British Prime Minister Tony Blair says a planned London conference on Palestinian reform will be a critical step toward Middle East peace talks and a Palestinian state.
Mr Blair, speaking after talks with Palestinian and Israeli leaders on Wednesday, was on the highest-level diplomatic mission to the region since Yasser Arafat's death last month, which has revived international peace efforts after years of bloody stalemate.
Both Israeli Prime Minister Ariel Sharon and emergent Palestinian leader Mr Mahmoud Abbas endorsed Mr Blair's plans.
But in signs of discord over priorities, when Mr Blair referred at a news conference with Palestinian leaders to the paramount need to "stop terrorism", they pointedly said Israel must also halt settlement building in the occupied West Bank.
Mr Blair told both sides the one-day meeting in early March of US, European and UN leaders, Arab states and the World Bank aimed to strengthen a moderate, democratic succession to Arafat that could negotiate peace with Israel.
The conference would assess ways to make Palestinian institutions more democratic, less corrupt and equipped to rein in militants who have seized de facto power in the streets and resisted truce proposals from veteran moderates like Mr Abbas.
Mr Blair said the London conference was not intended to supplant the deadlocked "road map" peace plan that US-led mediators hope to revive.
"This is a more modest first step ... getting back into the process of negotiation," Mr Blair told Israeli television. "What is important is that we can make progress after months and years in which there has been none."
A Foreign Office statement issued in London said the conference would lay groundwork for meetings of aid donors and private investors to help fuel Palestinian reconstruction.
Blair, echoing the US and Israeli line, said road map talks on a Palestinian state could not bear fruit unless Palestinians put a stop to militant violence beforehand.
"Viability cannot just be about territory, it also has to be about proper (Palestinian) democratic institutions, proper security ..." to persuade Israel it could live alongside a Palestinian state, he said in Jerusalem with Mr Sharon beside him.
Mr Abbas, tipped to win a January 9th election for a successor to Arafat, praised mr Blair for organising the conference but said there should be equal pressure on Israel to comply with "road map" requirements.
Mr Sharon has said Israel will not attend the conference and Mr Blair found no problem with that, as it would not take up thorny peace issues such as borders and Palestinian refugees on which the two sides remain far apart.
Diplomats say Mr Blair initially had grander peacemaking designs for the conference but had scaled them back.