SHARM EL-SHEIKH, Egypt - President Bush said yesterday that "it breaks my heart" the Palestinian people have been unable to establish an independent homeland, and he vowed anew to try to forge an Israeli-Palestinian agreement by year's end.

Bush's remarks from the sidelines of a regional economic conference in Sharm el-Sheikh, Egypt, appeared aimed at Palestinians and other Arabs who consider the U.S. administration so staunch a supporter of Israel that it turns a blind eye to the human-rights concerns of the Palestinians.

Many also doubt Bush's commitment to the tough negotiations ahead if he is to succeed in helping to craft a deal in just seven months.

"It breaks my heart to see the vast potential of the Palestinian people, really, wasted," Bush said, appearing alongside Palestinian Authority President Mahmoud Abbas. "They're good, smart, capable people that when given a chance will build a thriving homeland." Bush said he is "absolutely committed" to achieving an agreement.

"It would be an opportunity to end the suffering that takes place in the Palestinian territories," Bush added.

Egypt is one of Bush's most reliable Arab allies, yet even here, state-backed media mocked Bush's peace efforts, especially after his cozy visit to Israel on Thursday to celebrate the Jewish state's 60th anniversary - a date the Palestinians call the "day of catastrophe."

In a speech Thursday to the Knesset, Israel's parliament, Bush mentioned only vaguely "the hard choices necessary" for Israelis to do their part for peace, but offered no concrete steps. In those remarks, Bush lavished praise on Israel and reiterated its right to defend itself.

He did not visit Palestinian territories, and the only time he mentioned them was to say that Israel at 120 years old - in 2068 - would border an independent Palestinian state.

"We know very well that you personally, as well as your administration, are committed to reach peace before the end of 2008," Abbas said yesterday. "We are working very seriously and very aggressively with the hope that we will be able to achieve this objective."

Bush met with Abbas at his villa in the Egyptian resort town of Sharm el-Sheikh, where hundreds of the region's top political, academic and business figures are gathered for the annual World Economic Forum on the Middle East.

"Every one of these meetings helps advance the process. Every one of these meetings helps us inch toward the goal of getting a state defined with borders and the refugee issues, as well as security concerns, defined by the end of my presidency," Bush said.

Later, meeting the press with Afghanistan's President Hamid Karzai, Bush acknowledged that Saudi Arabia's modest boost in oil production that it revealed Friday "doesn't solve our problem." He said the United States must do more at home to boost energy supplies, expand refining capacity, promote nuclear energy, and advance alternative energies and conservation.

Bush's agenda for the conference is grueling, with one-on-one time built in for several of his most crucial Middle Eastern allies. Yesterday, he met with Egyptian President Hosni Mubarak, Karzai and Abbas.

Today, he is expected to sit down with leaders of Pakistan, Jordan and Iraq before giving a speech to the general conference audience.

Egypt-Israeli Talks Planned

Israeli Defense

Minister Ehud Barak will meet Egyptian President Hosni Mubarak on Tuesday to discuss efforts to work out a cease-fire between the militant Hamas rulers of the Gaza Strip and Israel, officials said.

The talks

in Sharm El-Sheikh, Egypt, will also focus on Egyptian efforts to prevent arms smuggling into Palestinian territory.

Egypt has been

trying for weeks to work out a truce. But rocket attacks on Israel from Gaza have persisted, as have Israeli air strikes against the attackers.

-Associated Press