Peace conference proposals announced by Powell

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The United States announced plans yesterday for a Middle East conference to advance peace efforts after positive developments, including the lifting of restrictions on Yasser Arafat and the partial withdrawal of Israeli forces from the West Bank.

Speaking after a meeting of the "Quartet" group of the US, the European Union, Russia and the United Nations, Colin Powell, the Secretary of State, indicated that the meeting would be held this summer. General Powell, flanked by the UN secretary general, Kofi Annan, and the Foreign Ministers of Russia and Spain, which holds the rotating EU presidency, said: "We committed ourselves to the promotion of serious and accelerated negotiations toward a settlement.

"We discussed how best to begin to prepare for an international conference meeting this summer."

The move capped a hectic day of diplomacy here, including an EU-US summit at the White House, after which President Bush cited "good progress" in reducing violence between Israelis and Palestinians, and in nudging the sides back towards talking to each other. The conference, assuming it goes ahead, will be another attempt to build on the fragile new momentum after the release of Mr Arafat.

All participants accept that a Palestinian state will be the centrepiece of a future peace settlement. But neither the date nor level of the gathering was clear – nor the countries who would participate. The expectation here is that it will take place in Europe, possibly Madrid, and deal with economic as well as political issues.

But General Powell did not say whether it would be at ministerial or summit level. The latter might raise insuperable problems, given the refusal of Ariel Sharon, the Israeli Prime Minister, to negotiate in person with Mr Arafat.

But Mr Sharon is due here for crucial talks with Mr Bush next week, while the Palestinian leader was relatively conciliatory yesterday. Speaking in Ramallah, Mr Arafat declared that he still saw Mr Sharon as a partner for peace, despite a day surveying the damage done by an Israeli offensive during its month-long siege of his headquarters.

The majority of Israelis still backed the 1993 Oslo peace accords, said Mr Arafat, and Mr Sharon was their leader. "He is the person who has been elected by the Israelis and we are dealing with him ... because our partner is the Israeli people."

The convening of a conference is another sign of how Europeans and Americans, after much public disagreement, are now starting to work together in earnest on the Middle East, together with Russia, the United Nations, and key Arab countries including Saudi Arabia, Egypt and Jordan, whose King Abdullah will also visit Washington soon.

The emerging consensus on the Middle East contrasted with the trade disputes which overshadowed the White House talks. The main bones of contention, still unresolved, are the steel import tariffs imposed by the US in March, and Washington's $4bn (£2.7bn) of tax breaks for exporting companies, deemed illegal by the World Trade Organisation.

Yesterday Mr Bush added another problem to the mix by confirming that he would sign a bill that increases by 70 percent the subsidies available to American farmers – at the very moment that Washington is accusing the EU of distorting agricultural competition with the Common Agricultural Policy and its panoply of subsidies.