Bush in Israel to celebrate the 60th year since its founding

He claimed that its 120th birthday would find it alongside a Palestinian state and in an all-democratic neighbourhood free of today's oppression and restrictions on freedom.

But, following this onrush of unreality, Mr Bush limited his mention of the Palestinians to just one sentence.

"The Palestinian people will have the homeland they have long dreamed of and deserved, a democratic state that is governed by law and respects human rights and rejects terror," he said.

Mr Bush made no acknowledgment of the hardship that Palestinians suffered when the creation of Israel in 1948 displaced hundreds of thousands, a fact that serves as a counterpoint to Israel's two weeks of jubilant celebrations.

The president also offered no detail on how the broader Middle East would move from today's harsh reality to his rosy vision.

But, while Israel marked its 60th anniversary, Palestinians engaged in their own annual ritual - one of mourning.

In the West Bank, the anniversary was commemorated with rallies, sirens and the launch of thousands of black balloons.

Conditions are a cause for deep concern and frustration in the Palestinian territories. The economy remains stagnant because of Israel's reluctance to ease its restrictions on movement and trade.

In reaction to the US president's speech, Hamas spokesman Sami Abu Zuhri said: "Bush's recognition of Palestine as the national homeland for the Jews is a very dangerous act of discrimination and racism, obliterating the right of return for Palestinians and establishing a genocide at the expense of Palestinian rights."