Bush Meets Sharon in Washington

President Bush is conducting another round of Middle East diplomacy — this time without leaving the Oval Office.

Bush met with Israeli Prime Minister Ariel Sharon at the White House — two days after talking policy at Camp David with Egyptian President Hosni Mubarak — and said that the two continue to work together to fight terror and create a secure Mideast region.

"I reiterated my strong view that we need to work toward two states living side by side in peace, and we talked about how to achieve this — how to achieve security and peace and economic hope for all people in the region," Bush told reporters after the meeting.

This is the sixth meeting between Bush and Sharon in the last year or so. Two previous trips by Sharon to Washington were cut short by homicide bombings in Israel by Palestinian terrorists.

The last time Sharon was in Washington, just over one month ago, he called it "premature" to set a timetable for the creation of a Palestinian state, and demanded the Palestinian Authority institute reforms first. The prime minister restated that demand Monday.

"Israel is a peace-seeking country. We believe in peace, we are committed to peace. Of course, in order to achieve peace in the Middle East, first of all we have to have the security. There should be a full cessation of terror hostilities and incitement, and of course, we must have a partner for negotiations. At the present time, we don't see yet a partner. We hope there will be a partner there with whom we'll be able to move forward," Sharon said.

On Saturday, Mubarak said that Palestinian leader Yasser Arafat should be given a chance to prove that he can make the reforms demanded of the Palestinians. Arafat named a smaller Cabinet on Sunday with a new minister to oversee the security forces.

"If he's given the authority and given the tools, I think it would work," Mubarak said. "If not, the people who elected him will not accept him afterward. We should give him a chance anyway."

In his talks with Mubarak Saturday, Bush declared Arafat virtually irrelevant to the peace process. On Monday, he repeated those remarks.

"I don't think Arafat is the issue. I think the issue is the Palestinian people. I am disappointed that he has not led in such a way that the Palestinian people have hope and confidence. So therefore, what we have to do is work to put institutions in place which will allow for a government to develop which will bring confidence not only to the Israelis but the Palestinians," Bush said.

Hours before Sharon's appointment with Bush, Israeli troops moved into the West Bank town of Ramallah and surrounded Arafat's compound, an Israeli army spokesman said.

The unidentified spokesman said the soldiers were deployed to prevent gunmen from entering the compound but did not enter it themselves. Palestinians officials said Arafat was inside the compound and was unharmed.

One Palestinian was killed and two wounded in exchanges of fire, Palestinian doctors said. Two soldiers were also wounded, the army said. The army's movement followed the murder of three Jewish settlers in a Palestinian attack on Sunday.

In response to the Israeli army's movement, Bush said Monday that action must be taken to "stop a few from stopping what most people in the region want — which is peace."

"Israel has the right to defend herself," he added.

On Sunday, Sharon ruled out an Israeli pullback to the country's 1967 borders, the crucial element of a Saudi peace proposal endorsed by nearly all other Arab states and by the United States.

"Israel will not return to the vulnerable 1967 armistice lines, re-divide Jerusalem or concede its right to defensible borders," Sharon wrote in a guest column in The New York Times.

Over six days in June 1967, Israel captured the West Bank, the Gaza Strip, the Golan Heights, east Jerusalem and the Sinai Peninsula in a pre-emptive strike against Egypt, Jordan and Syria. Israel returned the sparsely-populated Sinai Peninsula to Egypt in 1979, but has said since then that any further pullback jeopardizes its security.

Security issues will be at the top of an agenda for a Middle East peace summit this summer that was first proposed by Secretary of State Colin Powell. Mubarak and Sharon both support the idea, but Bush said Monday some movement needs to take place beforehand.

"No one has confidence in the emerging Palestinian government and so first things first, and that is, what institutions are necessary to give the Palestinian people hope and to give the Israelis confidence that the emerging government will be someone with whom they can deal? And that's going to require security steps, transparency when it comes to economic matters, anti-corruption devices, rule of law enforced by a court system."

Sharon dined with National Security Adviser Condoleezza Rice after arriving at Andrews Air Force base Sunday. He meets with congressional leaders on Tuesday.

Fox News' James Rosen and the Associated Press contributed to this report.