US President George W. Bush emphasized Middle East peace as a priority in a Saturday meeting with Pakistan's president, who said the Palestinian dispute is the core issue in fighting terrorism.
A discussion of the Middle East was a key part of Oval Office talks with Pakistan President Pervez Musharraf, Bush told reporters.
"I assured President Musharraf that there is an opportunity at hand to work toward the development of a Palestinian state and peace in the Middle East," Mr Bush said.
"I told him this will be a priority of my administration. The goal is two states living side by side." Outside the White House, Musharraf told reporters the two leaders "discussed terrorism in its entire complexity."
Neither president spoke in detail about the hunt for al-Qaeda leader Osama bin Laden along the border of Pakistan and Afghanistan and both emphasized the Israeli-Palestinian conflict.
"I think the president himself said that; that this is the core issue," General Musharraf said. "The core (of) fighting terrorism is resolution of the Palestinian dispute. "I'm very glad to say that President Bush is absolutely concerned and he thinks that it's a priority with him -- to resolve the Palestinian dispute and create a Palestinian state.