RAMALLAH, West Bank — President Bush on Thursday predicted that a Mideast peace treaty would be completed by the time he leaves office, and named a U.S. Air Force general to oversee compliance with a U.S.-backed peace plan.

Bush said he's convinced that both Israeli and Palestinian leaders understand "the importance of democratic states living side by side" in peace, and noted that he has a one-year deadline for progress on his watch.

"I'm on a timetable," he told reporters. "I've got 12 months."

He named Lt. Gen. William Fraser III, assistant to the Chairman of the Joint Chiefs of Staff, to monitor progress that both sides are making on the peace process known as the "roadmap," a U.S. official told The Associated Press.

Bush told Abbas about the position being filled by Fraser, who is expected to return to the region before the end of the month, said the official, who spoke on the condition of anonymity because the White House has not formally announced the appointment.

Fraser has traveled to the region with Secretary of State Condoleezza Rice. Bush briefly alluded to Fraser's role in a news conference with Palestinian President Mahmoud Abbas earlier on Thursday.

Bush said he had introduced Abbas to the "three-star Air Force General who will be running this process," meaning the process by which the United States will try to help Israelis and Palestinians resolve their differences.

Bush said he's convinced that both Israeli and Palestinian leaders understand "the importance of democratic states living side by side" in peace, and noted that he has a one-year deadline for progress on his watch.

"I'm on a timetable," he told reporters. "I've got 12 months."

He said he is not sure that the problem of Hamas, a militant Islamic group that took over the Gaza Strip in June, can be solved within that time frame. Hamas, he said, was elected to help improve the lot of Palestinians, but "has delivered nothing but misery."

Standing alongside Abbas at the news conference, Bush said he is confident that "with proper help, the state of Palestine will emerge."

"I am confident that the status quo is unacceptable, Mr. President, and we want to help you," Bush said.

Bush is on a three-day visit to Israel and the West Bank to show support for renewed Israeli-Palestinian peace talks following seven years of violence.

"The question is whether or not hard issues can be resolved and the vision emerges, so that the choice is clear amongst the Palestinians," Bush said. "The choice being, 'Do you want this state? Or do you want the status quo? Do you want a future based upon a democratic state? Or do you want the same old stuff?"'

"We want a state, of course," Abbas said in English.

The Palestinian leader called on Israel to fulfill its commitments under a 2003 U.S.-backed Mideast peace plan. The plan calls on Israel to halt settlement activity in the West Bank, while requiring the Palestinians to dismantle militant groups. Neither side has fully carried out its obligations.

"We start with you a new year, hoping that this will be the year for the creation of peace," Abbas told Bush.

Even though it's Bush's first trip to the Palestinian West Bank, it generated little excitement among Palestinians, who are largely skeptical of his promises to try to move along Israeli-Palestinian peace talks. The U.S. is perceived in the Palestinian areas as a staunch ally of Israel, at the expense of the Palestinians, but Abbas said Bush's visit "gives our people great hope."

The naming of a U.S. military leader to help prod along the Israeli-Palestinian talks is another sign of Bush's late-term effort to forge a peace deal. He has repeatedly said that the United States will not dictate the terms of an agreement, but has sought to show that his country is fully engaged in the process.

In the Mideast peace conference Bush led in Annapolis, Md., last November, he promised that the United States would "monitor" the negotiations.

Heavy fog, which forced Bush to drive, rather than fly to Ramallah, meant that he got an unexpected glimpse of the daily frustrations faced by Palestinians trying to move around the West Bank, nominally a Palestinian territory but one heavily controlled by the Israeli military. On his drive, Bush passed through a security checkpoint, and drove within sight of the Israeli separation barrier that Palestinians call an unacceptable wall.

Bush said he expects both Israelis and Palestinians to honor their obligations under the peace plan backed by the U.S., and that Israelis should help the Palestinians modernize their security forces.

"In order for there to be lasting peace, President Abbas and Prime Minister Olmert have to come together and make tough choices," Bush said. "And I'm convinced they will. And I believe it's possible — not only possible, I believe it's going to happen — that there be a signed peace treaty by the time I leave office (in January 2009).

Bush's trip through the Mideast does not include a stop in Gaza, an area controlled by Hamas, which swept Palestinian parliamentary elections in 2006. Hamas later led a violent takeover of the Gaza Strip, essentially splitting Palestinian governance. Hamas, which does not recognize Israel's right to exist, now runs Gaza, while Abbas and his secular Fatah Party, backed by the United States, now run the West Bank.

That split is a major stumbling block to any negotiated peace pact.

While Bush claims that Hamas has failed to help improve the lives of Palestinians living in Gaza, the president acknowledged that he doesn't know whether Abbas' government can resolve the Palestinian division before the end of the year.

"There is a competing vision taking place in Gaza," Bush said. "And in my judgment, Hamas — which I thought ran on the campaign, 'We're going to improve your lives through better education and better health' — has delivered nothing but misery."

Fawzi Barhoum, a Hamas spokesman in Gaza, quickly dismissed Bush and Abbas' hopeful comments.

"This meeting was for public relations only, it was an empty meeting without results, only more dreams and waste of time," the Hamas spokesman said. "The meeting focused on the so-called security topics which mean to act against the interests of the Palestinian majority and the resistance."

Bush also jabbed Israel for security polices that could carve up Palestinian territory into unworkable or ungovernable chunks.

"Swiss cheese isn't going to work when it comes to the outline of a state," Bush said.

The president also said that he understands Palestinian frustrations over checkpoints throughout the West Bank but says they're necessary for now to give Israelis a sense of security.

In Jerusalem, Israeli government spokesman Mark Regev said his government shares the belief that the "current status quo is far from desirable."

Once the fog lifted, Bush flew from Ramallah to Bethlehem after his news conference with Abbas. Along the way, signs in English proclaimed "Occupation is terrorism" and commanded the United States to "stop giving aid to occupation and death to our children."

The president toured the Church of the Nativity, which is jointly administered by three Christian denominations — Roman Catholic, Greek Orthodox and Armenian. Bush walked around the church with clerics in black robes and toured the grotto or cave beneath, which many believe is the birthplace of Christ. The president also is visiting the Roman Catholic Church of St. Catherine where Christmas decorations adorned 19th Century stone walls.

Outside the Church of the Nativity, Bush thanked some monks individually. He said he was happy to be in Bethlehem, and lamented the walls and checkpoints that restrict Palestinian life there.

"It's been a moving moment for me and the delegation to be here," Bush said. "For those of us who practice the Christian faith, there's no more holy site than the place where our Savior was born."

Associated Press Writers Mohammed Daraghmeh and Diaa Hadid in Ramallah contributed to this report.