DAMASCUS (Reuters) - Syria and Iran on Thursday dismissed as baseless U.S. President George W. Bush´s attacks on their policies in the Middle East.

In his State of the Union address on Wednesday, Bush accused Syria of letting "terrorists" use Syrian and Lebanese territory to "destroy every chance of peace" in the Middle East.

Syrian Foreign Ministry spokeswoman Bushra Kanafani said Damascus was doing all it could to stop fighters crossing into Iraq and had offered Baghdad a security agreement.

Washington imposed economic sanctions on Syria in May, citing the Iraq border issue and Syrian support for anti-Israeli Palestinian and Lebanese factions.

Damascus has recently signalled its readiness to resume peace talks with Israel without pre-conditions, but the Israelis say they want it to cease backing its militant enemies first.

Kanafani urged Washington to pursue Arab-Israeli peace talks. "Our position in support of peace is clear," she told Reuters.

Iran dismissed Bush´s charge that it is secretly pursuing nuclear weapons and his description of the Islamic republic as the "world´s primary state sponsor of terror".

"These claims have no basis," the state news agency IRNA quoted Foreign Ministry spokesman Hamid Reza Asefi as saying.

"Americans are ignoring the established democracy in Iran since the (1979 Islamic) revolution."

Bush´s remarks enraged Iran´s conservative state-controlled media. State television accused him of trying to capture Middle East oil under the pretext of promoting democracy in the region.

"Why is Bush only interested in promoting democracy in oil-rich regions?" asked one radio commentator.

EU DIPLOMACY

Tehran says its nuclear facilities will only be used for power generation.

Europe does not publicly challenge that stance, but an EU trio of Germany, France and Britain is urging Iran to scrap processes that could be used to make atomic bombs in return for trade incentives and help with a civilian nuclear programme.

"We are working with European allies to make clear to the Iranian regime that it must give up its uranium enrichment program and any plutonium reprocessing, and end its support for terror," Bush said.

Iran´s state television accused Washington of inconsistency by staying silent about Israel´s suspected nuclear arsenal.

Bush, citing recent elections in Iraq, the Palestine territories and Afghanistan, also said "hopeful reform is already taking hold in an arc from Morocco to Jordan to Bahrain."

He appealed to Saudi Arabia and Egypt to follow suit, in words almost identical to language he used in November 2003.

"The government of Saudi Arabia can demonstrate its leadership in the region by expanding the role of its people in determining their future," Bush said.

There was no comment from Riyadh, due to hold its limited municipal council polls in the capital this month in a cautious response to pressure to liberalise its absolute monarchy.

Cairo chose to see as benign Bush´s statement that Egypt "can show the way toward democracy" in the Middle East.

Asked if he saw Bush´s remarks as a criticism, Egyptian presidential spokesman Suleiman Awad said: "Not at all."

Egyptian President Hosni Mubarak has strongly hinted that he will seek a fifth six-year term in office this year, despite some opposition from reformists seeking constitutional change.

Dia el-Din Dawoud, head of the left-wing Nasserist party in Egypt, said Bush should not meddle in Egyptian politics.

"We don´t want constitutional or democratic reform in Egypt, or in any Arab country, to be merely a response to American pressure (but) to the interests of the people and popular pressure," he said. (© Reuters 2005 02/03/05)