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Secretary of State Condoleezza Rice on Tuesday cautioned against a growing sentiment in Israel to pursue peace with Syria instead of with warring Palestinian factions, saying there is "no substitute" for creating a Palestinian state.

Rice, who will discuss the stalled peace process with diplomats here Wednesday, has worked for months to lay the groundwork for Palestinians and Israelis to begin discussing what she calls a "political horizon" -- the parameters of a possible Palestinian state.

But with violence erupting between Palestinian factions -- and with Israel under constant attack from rockets launched from the Gaza Strip -- Rice has faced criticism from some outside experts for spending so much time on a diplomatic long shot, rather than seeking to quickly end the violence.

Israeli officials have confirmed Israeli news media reports that there is intense discussion about whether to pursue a peace agreement with Syria, which would in effect abandon the Palestinian track for now. Syrian President Bashir al-Assad has strongly suggested he is interested in reaching an agreement similar to one nearly concluded by his late father a decade ago, but Israeli officials are unsure whether he could actually deliver a deal.

Some Israeli officials, while increasingly skeptical that Rice's efforts will amount to much, are concerned that putting the Palestinian track on hold will only increase anger and resentment in the Palestinian areas.

Rice briefly met with the Syrian foreign minister, Walid al-Moualem, in Egypt this month to discuss the situation in Iraq, ending the administration's diplomatic isolation of Syria. But she indicated that she, too, had doubts the Syrian government was ready to negotiate.

"My understanding is that it is the view of Israelis, and certainly our view, that the Syrians are engaged in behavior right now that is destabilizing to the region," Rice said to reporters traveling with her on a European tour that will also include stops in Vienna and Madrid.

The Palestinian issue "is at the core of a lot of problems in the region," Rice added. She said "there is no substitute for trying to get to the place where the Palestinians finally have their state and the Israelis finally have a neighbor who can live in peace and security with them."

The "Israeli-Palestinian track is extremely important" because it "unlocks the key" to "further engagement between the Arabs and the Israelis," Rice said.

Rice's peace efforts this year have been stymied by multiple factors. She has attempted to bolster Palestinian President Mahmoud Abbas, who favors peace talks, against the legislature headed by Hamas, the anti-Israeli militant group. But in February, Abbas agreed to a fragile unity government between his Fatah party and Hamas.

Meanwhile, Israeli Prime Minister Ehud Olmert has abysmal public approval ratings because of his handling of last summer's war in Lebanon, limiting his willingness to make concessions. Olmert has frustrated U.S. officials by seeming to be increasingly indecisive.

On Rice's last trip to Israel more than two months ago, she announced that Olmert and Abbas had agreed to meet every two weeks. But only one such session has been held since then. Aides to the two men said Tuesday that the leaders would meet next week.

In meetings Wednesday with foreign ministers from other Group of Eight industrialized nations, Rice will discuss the continuing dispute with Iran over its nuclear program.

Almost exactly a year ago, Rice offered to join talks on the program if Iran suspended its uranium enrichment activities, but Iran has refused to do so despite two U.N. Security Council resolutions mandating sanctions. Rice said one key issue is whether to tighten the sanctions in a third U.N. resolution or to pursue tougher sanctions outside the U.N. framework.

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