(Adds aides’ comments after Olmert-Blair meeting)
By Alastair Macdonald
RAMALLAH, West Bank, July 24 (Reuters) - Tony Blair spoke of a "moment of opportunity" after he met Palestinian and Israeli leaders on Tuesday on his first visit to the region as an international envoy.
But the former British prime minister cautioned that steps toward peace would take time.
In his first public remarks since beginning a 48-hour trip to Jerusalem and the West Bank on Monday, Blair said he had come mainly "to listen and to learn and to reflect". He will return for longer in early September.
"I think there is a sense of possibility at the moment. I think this is a moment of opportunity," Blair said in Ramallah after meeting Palestinian Prime Minister Salam Fayyad.
After earlier talks in Jerusalem with Israeli President Shimon Peres, Blair said translating those possibilities "into something" would require work and thought "over time".
Blair also met Palestinian President Mahmoud Abbas, whose secular Fatah faction lost control of Gaza to Hamas Islamists in fighting last month. That has led Israel and Western powers to redouble their efforts to bolster the West Bank leader but has also hurt prospects for a Palestinian state in both territories.
Palestinian officials said they wanted Blair to use his ties to U.S. President George W. Bush to help end Israeli occupation and ensure a resumption of negotiations for a Palestinian state.
Blair himself is keen to play such a role, diplomats say.
But Israeli officials may see that as well beyond the brief Blair was given by the Quartet -- the United States, United Nations, European Union and Russia. That mandate, as Israeli officials emphasise, asks Blair to help bolster the economy and Palestinian institutions as a prelude to peace negotiations.
However, Abbas aide Saeb Erekat dismissed the idea Blair could do that in isolation from political relations with Israel:
"How can we be seriously thinking about economic development and governance ... while the settlements, the wall, ... the roadblocks are eating up the whole idea of a Palestinian state?" he said. "The mandate of Prime Minister Blair is motivated and generated by the objectives and not by the verbal mandate."
Israel and U.S. Secretary of State Condoleezza Rice would prefer to keep Washington as the lead mediator on a peace deal, diplomats involved in such discussions have said.
A spokesman for Blair said that carrying out the mandate to bolster the Palestinian economy and governing institutions would necessarily involve talking to Israel on security arrangements.
A late meeting with Israeli Prime Minister Ehud Olmert was described by a Blair spokesman as "very positive". He said Blair had welcomed Olmert’s pledge to work closely with him.
An Olmert aide said that issues discussed included ways of encouraging private investment in the West Bank and focussing on promoting "smaller" initiatives that had a chance of succeeding.
"The prime minister said that advancing many little things that will succeed is better than trying a few things that will fail," spokeswoman Miri Eisin said.
Blair hopes fostering security and good governance among the Palestinians will help reassure Israel it can negotiate a peace.
Fayyad said he was not pushing for any expansion of Blair’s mandate because, he argued, all the key issues were intertwined:
"There’s a great deal of interaction," he said. "This is a political process by its very nature, aimed at ending the occupation, ... aimed at establishing a Palestinian state."
While Hamas leaders will criticise Blair’s failure to talk to them and some Arab leaders say Blair is too close to Bush and Israel following his involvement in the war in Iraq, Palestinian leaders hope those relationships can produce results for them.
"We are hoping ... to take advantage of his personal relationship with the Americans and Israelis," Abbas aide Nabil Abu Rdainah told Reuters.
Blair is set to fly on to the Gulf on Wednesday, when the Egyptian and Jordanian foreign ministers are due in Israel to promote an Arab League peace proposal. (Additional reporting by Adam Entous, Jeffrey Heller, Allyn Fisher-Ilan and Ori Lewis in Jerusalem; Wafa Amr in Ramallah)