Israeli Prime Minister Ehud Olmert and Palestinian President Mahmoud Abbas agreed Tuesday to make every effort to conclude a two-state peace accord by the end of next year. The commitment was announced by President Bush at the formal opening of the Annapolis Middle East peace conference. VOA's David Gollust reports from Annapolis.

The main participants in the conference wasted no time in announcing their expected agreement to mount a drive for an Israeli-Palestinian peace accord by the end of President Bush's term in office.

In an address opening the meeting, bringing together senior officials of nearly 50 countries and international organizations, Mr. Bush read a joint statement committing the sides to "propagate a culture of peace and non-violence"and to engage in immediate final-status peace negotiations.

"In furtherance of the goal of two states, Israel and Palestine, living side-by-side in peace and security, we agreed to immediately launch good faith bilateral negotiations in order to conclude a peace treaty resolving all outstanding issues including all core issues as specified in previous agreements," he said. "We agree to engage in vigorous, ongoing and continuous negotiations and shall make every effort to conclude an agreement before the end of 2008."

Mr. Bush said the sides will set up a steering committee to meet continuously starting December 12 to advance the process, to be supplemented by meetings every two weeks of President Abbas and Prime Minister Olmert.

The parties further agreed to fulfill obligations under the 2003 road map of the international Middle East "quartet" - the United States, Russia, the European Union and the United Nations - under a process to be monitored by the United States.

Though the current situation is clouded by among other things, the split in Palestinian ranks that has left the radical Islamic movement Hamas in control of the Gaza Strip, Mr. Bush said the time is right for the initiative. He said a battle is underway for the future of the Middle East and that victory must not be ceded to the extremists.

The obstacles to a peace accord were underlined in ensuing speeches by the two principals. Prime Minister Abbas stressed the need to resolve the issue of Palestinian refugees in all its dimensions and the Palestinians' insistence on having the capital of their state in east Jerusalem.

Mr. Abbas cast the Annapolis meeting as a critical turning point for the region and said conditions for peace are unlikely to be as favorable if the current effort fails.

"Our region stands at a crossroads that separates two historical phases," he said. "A pre-Annapolis phase and a post-Annapolis phase. In other words, this extra-ordinary huge opportunity provided today by the Arab, Islamic and international position, and the over-whelming support from the public opinion in both the Palestinian and Israeli societies for the need to exploit the occasion of this conference that would launch the negotiating process and no to do away with the potential it carries - I say that this opportunity might not be repeated."

Mr. Abbas stressed his commitment to Gaza Palestinians, where humanitarian conditions have deteriorated under Hamas rule. Without mentioning Hamas by name, he pledged to Gazans that "your hours of darkness will end."

Prime Minister Olmert, for his part, stressed Israel's commitment to the peace process despite Palestinian terror attacks in recent years and the continuing rocketing of parts of southern Israel by extremists in Gaza.

Mr.Olmert said settling the decades-old conflict will be painful for all those involved but is none-the-less inevitable.

"I believe there is no path other than the path of peace," he said. "I believe there is no just solution other than the solution of two national states for two people. I believe there is no path that does not involve painful compromise for you, the Palestinians, and for us the Israelis."

The product of months of diplomacy by Secretary of State Condoleezza Rice, the conference includes key Muslim countries and many Arab states that do not have diplomatic relations with Israel.

Mr. Olmert said Israel aspires to have normal relations with all of them, and urged the broader Arab world to end what he termed their "boycott , alienation and obliviousness" toward the Jewish state.