Reports this week reiterating President Bush's willingness to endorse Palestinian statehood have drawn predictably heated responses from both sides of the Middle East conflict — heartening Arab leaders but angering Israel's friends in Washington.

Reports surfaced Tuesday, the day Secretary of Defense Donald Rumsfeld departed for a coalition-building swing through four key Arab countries, that Bush had planned to meet with Palestinian leader Yasser Arafat during the United National General Assembly meeting Sept. 23. The meeting was derailed by the terrorist attacks Sept. 11.

The meeting was part of an initiative that was also to include a speech by Secretary of State Colin Powell that would have held out the prospect of U.S. recognition of a Palestinian state.

The revelation surprised many who thought Bush was fence-sitting over the Mideast question, though Bush denied he ever kept a secret of his intentions.

"The idea of a Palestinian state has always been part of a vision, so long as the right to Israel to exist is respected," Bush said.

The administration dismissed the plan as "old news," but the stories nonetheless sparked a fresh round of debate about how far the United States should go to appease Arabs in its effort to wage this new war on terrorism.

Weighing the Arguments

Clovis Maksoud, former American ambassador to the League of Arab States and United Nations, said the Bush administration must send the signal to moderate Arab nations like Saudi Arabia and Jordan that it is working to dispel the anti-Muslim, pro-Israel bias it is perceived to have in the region.

The reports were "a welcoming development" and have already spurred reactions in the Arab community, said Maksoud, who spoke with Fox News from Beirut, Lebanon.

The either-you're-with-us-or-with-the-terrorists attitude of the administration "has developed into a more nuanced and subtle imperative," he said.

The reports also show that the United States "is not going to sidestep Palestinian rights and marginalize them ... and therefore has brought it back to center stage," Maksoud said.

But Gary Schmitt, director of the New American Century Foundation in Washington, D.C., said such an initiative would be wrong-headed.

"The first problem is that it basically rewards the Palestinian's own terrorism with very significant gains — especially when you're telling the world you're against terrorism," he said.

David Wurmser, Middle East expert for the American Enterprise Institute in Washington, D.C., agreed. "Regardless of what one thinks about the ultimate solution to the Israel-Palestinian problem, to bring it up now is really a big problem," he said.

Wurmser said if moderate Arab nations "are as really horrified as they claimed to be" about the Sept. 11 attacks, then they will be as eager as the United States to quash the terror network without looking for concessions on the Mideast issue.

"If they want to be part of a coalition, they have to prove themselves to us, not the other way around," he said.

Changing Relations?

The implications of such a policy for Israel are not altogether clear.

"It is dangerous, because there is an obvious temptation to trade things to the Arabs at the expense of Israel, so there are some short-term threats to Israeli interests," said Charles Fairbanks, professor of foreign relations at the Johns Hopkins School of Advanced International Studies.

"In the long term our success is in [Israel's] interest," he added. "Diplomatically, we need to try and draw on their long-term interests and diminish their understandable irritation at the concessions we may make to Arab interests in the short-term."

Fox News' James Rosen contributed to this report.