European Union leaders on Friday extended by three months an aid deal for the Palestinians that bypasses the Hamas-led Palestinian Authority government that took office earlier this year.
The Middle East faces "one of the worst crises in years," EU leaders said, stating their readiness to work with a "legitimate" unity Palestinian government acceptable to the international community.
Arab League envoys this week mediated a tentative agreement between the Lebanese government and the opposition on a national unity cabinet.
EU leaders also condemned the assassination last month of anti-Syrian Lebanese Industry Minister Pierre Gemayel, and decried any other attempts to "destabilize Lebanon through political assassinations or terrorist acts."
Chirac said France would host an international donor conference for Lebanese reconstruction on January 25. "More than ever, Lebanon needs our help," he said.
Assad told Rome's la Repubblica newspaper Damascus was ready to cooperate with Washington to resolve regional issues and challenged Israel to open up to Syria. He also said Europe had a "complex" over the Jewish Holocaust.
"The fact is that we (Syrians) live in this region, we know it well," he said in the long interview, adding that Washington "needs our help" to formulate a plan for Iraq.
Asked if he was ready to work constructively with Washington, he said, "Certainly we are ready to do so. Because if you don't resolve regional questions - Iraq, Lebanon, the Israeli-Palestinian conflict - it will be we bordering countries that will pay the highest price."
Syria had "excellent relations" with many factions in Iraq and could support a national conference on the future of the country, he said. Assad also said the United States and Europe "must talk to Tehran."
A report released last week in Washington by a special panel recommended the United States engage Syria and Iran to bring about stability in Iraq.
The White House has so far rejected such contacts and President George W. Bush renewed his criticism of Damascus on Wednesday, accusing Syria of human rights abuses and of trying to undermine Lebanese sovereignty.
Assad said the Iraq Study Group report vindicated Syria's position that it had to be listened to.
Assad said Israel should also take up Syria's offer to hold talks. "I say to [Israeli Prime Minister Ehud] Olmert: 'Take a chance. Discover if we are bluffing or not.'"
Israel is firmly opposed to talks with Syria, saying Damascus needs first to cut its links to the anti-Israeli militant groups Hamas and Hezbollah. Syria wants talks to recover the Golan Heights, captured by Israel in
1967.
Asked about this week's conference sponsored by Iran questioning the Holocaust, Assad said: "Listen, Europe has a complex about the Holocaust. We don't because we didn't do it.
However, U.S. Secretary of State Condoleezza Rice has rejected a bipartisan panel's recommendation that the Bush administration engage Syria and Iran in efforts to stabilize Iraq, The Washington Post reported
on Friday.
The "compensation" required for any such deal might be too high, Rice told the paper in an interview.
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, the Post reported.
She also argued that neither Syria nor Iran should need incentives to help achieve stability in Iraq, the Post reported.
"If they have an interest in a stable Iraq, they will do it anyway," Rice said.
Rice told The Washington Post that Bush could be "quite expansive" in the policy review and that the new plan would be a "departure." However, she told the newspaper that Bush would not radically change any of his long-term goals or commitment to Iraq.
Rice also said the administration would not retreat from its push to promote democracy in the Middle East and reiterated her commitment to pursuing peace between Palestinians and Israelis, the Post said.
"Get ready. We are going to the Middle East a lot," Rice said.
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