US President Barack Obama said yesterday the United States must change its policy or face a deepening rift with the Arab world, pledging to promote reform across a region hit by six months of protest.

In a speech responding to the events of the “Arab Spring,” Mr Obama also unveiled a multi-billion dollar economic plan to spur and reward democratic change in the region, modelled on the evolution of post-Soviet eastern Europe.

The President meanwhile called on the governments of Bahrain and Yemen to work with their opposition parties to resolve the unrest which has rocked their countries.

And a day after imposing financial sanctions on Syrian President Bashar al-Assad and six top aides, Mr Obama said Mr Assad must lead a political transition or “get out of the way” of the movement for democracy in his country.

As Arabs in the Middle East and North Africa call out for dignity after decades under the yoke of autocrats, many backed by the US, he said Washington had to do more than just pursue its core interests.

These interests, he said, are countering terrorism, stopping the spread of atomic weapons, securing the free flow of commerce, standing up for Israel’s security and pursuing Arab-Israeli peace.

Mr Obama said the uprisings show that a policy of repression will no longer work as people seek to win their freedom and human rights. He also warned that Al-Qaeda’s agenda of “extremism” was now seen as a “dead-end” in Arab nations.

In calling on Syria’s Assad to lead a political transition to democracy or “get out of the way,” Mr Obama called on the Syrian government to stop shooting demonstrators, allow peaceful protests, and release political prisoners.

“So far Syria has followed its Iranian ally seeking assistance from Tehran in the tactics of suppression,” he said.

He also said that in Libya, where the United States joined a military intervention to prevent a massacre of the opposition, Colonel Muammar Gaddafi will “inevitably” leave or be forced from power.

In saying that US “friends in the region have not all reacted to the demands for change consistent with the principles” of human rights and freedoms, Mr Obama singled out Yemen, a key ally in the fight against Al-Qaeda.

He said President Ali Abdullah Saleh “needs to follow through on his commitment to transfer power.”

Mr Saleh foiled a Gulf plan aimed at ending a bloody political dispute “by refusing to sign it” on Wednesday, the head of the opposition Common Forum, Yassin Saeed Noman, told AFP.

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