Bush: Iran held hostage by clerical elite

President George W. Bush denounced Iran in his State of the Union speech as a country “held hostage by a small clerical elite that is isolating and repressing its people."

friends with a free and democratic Iran.”

He said Iran must stop sponsoring terrorists in the Palestinian territories and Lebanon and “defying the world with its nuclear ambitions," which “the world must not permit.”

Bush announced no new foreign policy initiatives in the annual speech to Congress, a highlight of the U.S. political calendar. But he spoke in sweeping terms of the need to end tyranny and encourage economic progress abroad and avoid calls for isolationism and protectionism at home.

“Ultimately, the only way to defeat the terrorists is to defeat their dark vision of hatred and fear by offering the hopeful alternative of political freedom and peaceful change," Bush said.

'Hamas must recognize Israel'

His speech came less than a week after the Palestinian group Hamas, which the United States considers a terrorist organization, won parliamentary elections.

Bush noted the election in his speech: "Now the leaders of Hamas must recognize Israel, disarm, reject terrorism and work for lasting peace.”

'More democratization in Arab world'

While praising the Palestinians, Egypt, and Saudi Arabia for recent elections, Bush said more is needed.

“Elections are vital, but they are only the beginning,” he said. "Raising up a democracy requires the rule of law, protection of minorities, and strong, accountable institutions that last longer than a single vote.”

While saying half the world lives in democratic nations, “we do not forget the other half - in places like Syria, Burma, Zimbabwe, North Korea and Iran - because the demands of justice, and the peace of this world, require their freedom as well.”

In speaking of his commitment to spreading democracy, Bush conceded that "some dismiss that goal as misguided idealism." But he said U.S. Global leadership is "the only way to secure the peace, the only way to control our destiny.”

He rejected any domestic pressure toward isolationism.

“We are the nation that saved liberty in Europe, and liberated death camps, and helped raise up democracies, and faced down an evil empire. Once again, we accept the call

of history to deliver the oppressed and move this world toward peace.”

Bush also rejected protectionism and said the United States needs to be more competitive in the global economy.

“The American economy is pre-eminent but we cannot afford to be complacent," he said. "In a dynamic world economy we are seeing new competitors like China and India. This creates uncertainty, which makes it easier to feed people's fears.”

He also used an international barometer to argue that the U.S. economy was strong. He said that over the past 2 years, “America has created 4.6 million new jobs more than Japan and the European Union combined.”