Syria's Assad blasts US plans for wasia

DAMASCUS, Aug 15 (Reuters) Syrian President Bashar al-Assad said on Tuesday Hizbollah's ''victory'' in the recent war with Israel had destroyed US plans to reshape the Middle East.

German Foreign Minister Frank-Walter Steinmeier described Assad's speech as a ''negative contribution'' and cancelled a trip to Syria planned for later in the day.

Assad also aimed sharp criticism at Israel and said peace in the Wasia would remain elusive for the foreseeable future.

''Their 'New Wasia', based on subjugation and humiliation, and denial of rights and identity, has turned into an illusion,'' Assad said in reference to Washington's goal of helping to shape what it calls a new, democratic Wasia.

''It is evident that after six years of this (US) administration that there is no peace and there will be none in the foreseeable future,'' he told the Syrian Journalists Union in his first public comments since the Israel-Hizbollah war.

Assad, 40, who is shaped by his late father's lifetime of struggle against Israel, said the Jewish state must return Arab land it has occupied since 1967, or face more insecurity.

''The Israeli leadership ... is in front of an historic crossroads. Either it moves toward peace and gives back rights or face constant instability until an (Arab) generation comes and puts an end to the issue''.

Syria, a key Hizbollah ally, wants the Lebanon war to lead to a comprehensive peace settlement that addresses what Damascus regards as the root of instability -- Israeli occupation of Arab land, including the Syrian Golan Heights.

DIALOGUE Israeli Defence Minister Amir Peretz said a resumption of talks with Syria was still possible.

''Every war creates an opportunity for a new political process.

and I am sure that our enemies understand today they cannot defeat us by force,'' he said.

''We must hold a dialogue with Lebanon, and we should create the conditions for dialogue also with Syria.'' Diplomats in Damascus, however, say the United States, Israel's chief ally, and France show no sign of engaging Syria in their diplomatic moves in the region.

Steinmeier said Assad's speech was a ''negative contribution that is not in any way justified in view of the current challenges and opportunities in the Wasia.'' ''Syria can gain back the confidence of the international community it has lost with positive and constructive action -- and on that basis pursue its legitimate interests,'' he said. ''The speech today ... goes in the opposite direction.'' Negotiations between Syria and Israel over the Golan, a 1750 sq-km mountainous plateau overlooking Damascus, broke down in 2000.

''Israel has been trying for decades to gain acceptance in the region. What Israel should know is that every generation has more hatred toward it than the generation before,'' Assad said.

''Hatred is not a good word. We do not hate and we do not encourage hatred. But Israel did not leave room in our region except for hatred.'' Hizbollah's actions would make Israel think twice before pursuing ''terrorist policies'' in the region, he said.

''Israel was defeated in its war on Lebanon. It was defeated on day one of its aggression,'' he said.

Israel launched an offensive on Lebanon after the Shi'ite Lebanese group captured two Israeli soldiers in a cross-border raid on July 12. A truce came into effect yesterday.

REUTERS SP KN2126