Ms. Rice says it is a time of optimism after years of bloodshed in the Middle East.
But she is tempering those remarks with reminders that fundamental steps must still be taken by the two sides to bring them back to the road map leading to a two-state solution to the conflict.
The Secretary of State, on her first visit to the region since taking office less than two weeks ago, paid a somber visit in the rain to Israel's Yad Vashem Holocaust memorial on Jerusalem's outskirts, before holding meetings with Israeli Prime Minister Ariel Sharon and Foreign Minister Silvan Shalom.
In public comments with Mr. Shalom, Ms. Rice stressed U.S. support for Mr. Sharon's disengagement plan from Gaza and four settlements in the West Bank, and said the Palestinian side has new leadership expressing a desire for a peaceful future with Israel.
She said the United States will ask Israel to continue to make the hard decisions needed to promote peace and the emergence of a democratic state, and for the parties in the region to support the process. In that regard she welcomed Egypt's initiative to host, on Tuesday, the first Israeli-Palestinian summit in more than four years.
Ms. Rice said the Palestinians must make certain there is an effective fight against terrorism, and that there be a halt to incitement by all parties. Earlier in the day, in Ankara, she made some of her strongest comments to date on the subject of anti-Israeli incitement in the Arab world, saying Israel and the Jewish people deserve to live in peace in the Middle East, with the respect of their neighbors.
"We have been very clear that incitement cannot be countenanced, it cannot be ignored., that is not possible simultaneously to say you want a peace between the Israelis and the Palestinians that is lasting, and at the same time ignore or countenance some of the most horrific caricatures of Israelis or anti-Semitism in any form. Both sides need to make certain that they are presenting positive images of each other, of their cultures," she said.
Though she will be in the region on the eve of the summit at Sharm el-Sheikh in the Egyptian Sinai, Ms. Rice will not attend.
She told Israeli television interviewers that while the United States will be active in the process, and available when needed, it is a good thing when the parties and regional leaders can push things forward on their own.
She also says the Bush administration has no plans, at least for now to name a special envoy for the Middle East. She says she has no objection to the idea in theory but that officials are still discussing how the United States can be most helpful.
A State Department spokesman said that in the course of more than two hours of talks with Mr. Sharon, Ms. Rice outlined a possible security mechanism to help Palestinians build effective security forces to fight terrorism, and spur cooperation by the sides in ending violence.
The spokesman gave no details on what that might entail, but said the idea would be discussed with the Palestinians Monday. In interview last week, Ms. Rice raised the prospect of U.S. support to train and equip Palestinian security forces.