(Agencies)
Updated: 2008-01-16 08:16

"It's not going to matter to me one way or the other if they hit our ships, and the Iranian government has got to understand that," Bush said.

Bush said he tried to clear up confusion in the region created by a new US intelligence finding that Iran had stopped a secret nuclear weapons program in 2003 -- contradicting White House claims that Tehran was still pursuing such arms. He said he told Sunni Arab leaders worried about Shiite Iran's ambitions for regional power that "all options are on the table" for dealing with the continuing threat from Tehran but that "I'd like to solve this diplomatically."

The Saudi foreign minister, Prince Saud al-Faisal, called Iran "a neighborly, important country in the region." "Under any circumstance, escalation in the region is in nobody's interest," he said.

Rice slipped away from Bush's entourage in the Saudi capital at 6:40 a.m. Tuesday for an unannounced trip to Iraq. Bush said he had been encouraged by signs of legislative progress in Baghdad and decided about 10 days ago that he would send her -- but not go himself, as some speculated -- because she could "push the momentum by her very presence."

In Baghdad, Rice congratulated Iraqi Prime Minister Nouri al-Maliki on the political progress that has moved along "quite remarkably," citing passage of U.S.-sought legislation reinstating former Saddam Hussein loyalists to government jobs.

She flew back to Saudi Arabia in time for dinner with Bush and the king at the ranch and then hurried to Riyadh for a news conference with Saud.

"I don't know what more outreach we can give the Israelis," Saud said, referring to an Arab peace plan and the sentiment in the region that Israel hasn't been meeting its obligations under an internationally sponsored roadmap, and that the US is too lenient on that point. He said Israel's continued Jewish settlement activity in the Palestinian territories "cast doubt on the seriousness of the negotiations."

Bush acknowledged widespread skepticism about him in the Middle East. "Of course. I mean, my image: `Bush wants to fight Muslims,'" he said in an ABC News "Nightline" interview. "I'm sure people view me as a war monger and I view myself as a peacemaker. They view me as so pro-Israeli I can't be open-minded about Palestinian peace. ... You just have to fight through the stereotypes by actions."

Bush said that throughout his trip, he encountered "genuine concern about protectionism" in the United States, including questions about whether foreign capital was welcome and what message US visa restrictions send. "That troubles me because that's not the way our country is," he said.

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