Nov. 4 (Bloomberg) -- Secretary of State Hillary Clinton will seek to give a push to the Middle East peace process and allay Arab concerns about the U.S. role in talks today with Egyptian President Hosni Mubarak.

“Mubarak is a very adroit reader of the parties” who has “a very good working relationship” with Israeli Prime Minister Benjamin Netanyahu, State Department spokesman P.J. Crowley told reporters traveling with Clinton, who arrived in Cairo yesterday after four days of intensive discussions with leaders in the region. She wants to see Mubarak “face to face” to discuss pushing the stalled peace process forward, Crowley said.

Clinton’s detour to Egypt before returning to Washington reflects President Barack Obama’s push to engage all parties to press Israel and the Palestinians back to the bargaining table.

While Obama has made a two-state solution a priority, the gap between the two sides requires energy to keep the process alive and expectations are low for a breakthrough anytime soon, officials say.

“Without this effort, it’s likely that things would go from difficult to worse,” Crowley said of Clinton’s consultations since Oct. 31 with Palestinian Authority President Mahmoud Abbas in Abu Dhabi, Netanyahu in Jerusalem and Arab leaders at a conference in Marrakech, Morocco.

Pitfalls of Waiting

Waiting for perfect conditions “is never a good thing,” Crowley said. “Sometimes the effort has an impact in and of itself.”

Clinton met with Egyptian intelligence chief Omar Suleiman in Cairo last night to discuss his efforts to encourage a unity government between rival Palestinian factions, Fatah and Hamas, and with Foreign Minister Ahmed Aboul Gheit. She also conferred in Cairo with U.S. special envoy George Mitchell, who has been meeting with Israeli and Palestinian leaders and King Abdullah of Jordan, the only Arab state aside from Egypt to recognize Israel.

Clinton suggested yesterday in Morocco that she “could have been clearer” when she hailed as “unprecedented” a proposal from Netanyahu to limit, not freeze, the expansion of Israeli settlements on the West Bank. The comments, during her Oct. 31 visit to Jerusalem, sparked an outcry from Arab leaders.

“President Obama was absolutely clear,” she said in an interview taped with Al Jazeera before she left Marrakech. “He wanted a halt to all settlement activity. And perhaps those of us who work with him and for him could have been clearer in communicating that that is his policy, that is what we’re committed to doing.”

Palestinian State

Clinton said she “was the first American associated with any administration to call for the establishment of a Palestinian state” 10 years ago. “A lot of people thought that was very radical; now there is consensus.”

Tempering her earlier praise for Netanyahu’s offer, Clinton said at a Nov. 2 gathering of Arab and Group of Eight foreign ministers in Morocco that it “falls far short” of U.S. calls for a total settlement freeze.

Steps to improve West Bank security by Palestinian Authority President Abbas and Prime Minister Salam Fayyad were also “unprecedented” and Israel “should reciprocate,” Clinton said.

The decision to clarify her remarks underscores the Obama administration’s balancing act in nudging Israelis and Palestinians back to talks.

Last May, Clinton said only a complete construction halt in the West Bank would be acceptable. In September after meeting Abbas and Netanyahu at the United Nations, Obama referred only to a “restraint” in settlements.

Libyan Meeting

Before leaving the Marrakech conference yesterday, Clinton met with Libyan Foreign Minister Musa Kusa, a former intelligence chief when the U.S. classified Libya as a state sponsor of terrorism. The countries normalized relations in 2003, and the U.S. has credited Kusa and Libyan intelligence with cooperating against al-Qaeda.

Clinton and Kusa discussed Sudan, Darfur and counterterrorism, said Crowley, who attended the meeting. He said they didn’t raise the case of Abdel Basset al-Megrahi, the Lockerbie bomber whose August release from a Scottish prison to Libya angered families of the 270 airline-crash victims.

“While the issue of Megrahi did not come up, our views on that have not changed and the Libyans understand” that “very well,” Crowley said.

Before Clinton walked back her settlement remarks, Amre Moussa, secretary-general of the 22-member Arab League and a senior Egyptian diplomat, said he feared the peace process had been crippled.

Arab Criticism

“Failure is in the atmosphere all over,” he said. Clinton’s words left the impression that “Israel can get away with anything.”

Clinton’s clarification didn’t allay the Arab League’s frustration over the apparent U.S. retreat from demanding a settlement freeze, Hisham Youssef, Moussa’s spokesman, said in a telephone interview yesterday.

As recently as the 2007 peace conference in Annapolis, Maryland, Israel committed to stopping settlements under the Bush administration’s 2003 “road map” for peace and must do so before talks can start, he said.

Clinton’s revised remarks satisfied Palestinian Foreign Minister Riad Malki, who told reporters in Marrakech his government was “happy that such a position was highlighted and brought back to the right line.”

Clinton corrected herself in her Al Jazeera interview after aides pointed out she misspoke by saying the Camp David accords under her husband Bill Clinton’s administration would have achieved an Israeli capital in East Jerusalem. She meant a Palestinian capital.

To contact the reporters on this story: Indira Lakshmanan in Cairo at ilakshmanan@bloomberg.net

Last Updated: November 3, 2009 18:15 EST