WASHINGTON, Dec 15: US Secretary of State Condoleezza Rice has rejected the proposal for holding talks with Iran and Syria saying that it would be too high a “compensation” for stability in Iraq.

In her interview to the Washington Post published on Friday, Ms Rice argued that neither country should need incentives to foster stability in Iraq. “If they have an interest in a stable Iraq, they will do it anyway.”

Ms Rice said she did not want to “trade away” Lebanese sovereignty to Syria or allow Iran to obtain a nuclear weapon as a price for peace in Iraq.

Ms Rice said that if the two countries have an interest in stabilising Iraq "they will do anyway."

The bipartisan Iraq Study Group had urged the Bush administration to engage Iran and Syria for restoring peace to Iraq.

The secretary also said the administration would continue to push to promote democracy in the Middle East.

President Bush is reviewing US policies in Iraq and has said he will announce his decision on making any changes in January.

In her interview to the Post, Ms Rice said there would be no retreat from the administration's push to promote democracy in the Middle East, a goal that was de-emphasised by the Iraq Study Group in its report last week but that Ms Rice insisted was a “matter of strategic interest.”

She reiterated her commitment to pursuing peace between Palestinians and Israelis -- a new effort that President Bush announced in September but that has yielded little so far.

"Get ready. We are going to the Middle East a lot," said Ms Rice. In a separate interview with Washington Post editors and reporters, Director of National Intelligence John D. Negroponte provided an assessment of the situation in Iraq that did not deviate much from the Iraq Study Group's grim appraisal. He said the Iraqi insurgency could now finance itself from inside Iraq "through corruption, oil smuggling and kidnappings".

Ms Rice said that President Bush could be "quite expansive" in terms of a policy review and that the new plan would be a "departure", but the president will not radically change any of his long-term goals or commitment to Iraq.

Ms Rice argued that the Middle East is being rearranged in ways that provide the United States with new opportunities, what she repeatedly called a "new strategic context."

She said the range of struggles in the Middle East, such as the election of Hamas in the Palestinian territories, the conflict between Hezbollah and the Lebanese government, and strife in Iraq, represents a "clarifying moment" between extremists and what she called mainstream Arabs.

"This is a time for pushing and consulting and pressing and seeing what we can do to take advantage of this new strategic context," Ms Rice said.

She said democracy in the Middle East is "not going to be concluded on our watch" and acknowledged that "we've not always been able to pursue it in ways that have been effective."

"I take that criticism," she added. Ms Rice's comments on Iran and Syria were among her strongest on one of the key recommendations of the Iraq panel, co-chaired by former secretary of state James A. Baker III and former congressman Lee H. Hamilton.

Ms Rice said the administration's goal over the next two years is to give Iraqis the space to marginalise extremists and create a moderate middle that can hold the country together. The violence may not have ended before the administration leaves office, she acknowledged, but she said she hopes that Iraqis would "get to a place that is sustainable" by the end of 2008.

Although the administration is reviewing its troubled strategy in Iraq, Ms Rice said the United States ultimately does not hold the key to solving the country's multifaceted military and political crises.

"The solutions to what is happening in Iraq lie in Baghdad, in their ability to deal with their own political differences," she said.

Ms Rice said Iraqi officials have appealed to the administration to show greater flexibility and to hand over more responsibility to the new government, which was elected last December and took office in May.

Ms Rice voiced support for Prime Minister Nouri al-Maliki but said the full array of sectarian and ethnic leaders must be prepared to bring their diverse communities along in tackling the most sensitive issues, including political reconciliation and disarming militias.

"You can't ask a prime minister in a democracy to take difficult steps that nobody will back that up," Rice said.

Although Shia militias and death squads are behind much of the sectarian violence, Ms Rice said she believes that most Iraqi Shias are "firmly" on the side of democracy. The Shia-dominated government is committed to Iraq's national identity and does not want Iraq to be dominated by Iran, said Ms Rice.