(Adds quotes from Rice interview, paragraphs 10-11) WASHINGTON, Dec 15 (Reuters) - U.S. Secretary of State Condoleezza Rice has rejected a bipartisan panel's proposal that the Bush administration engage Syria and Iran in efforts to stabilize Iraq, The Washington Post reported on Friday. The "compensation" required for any such deal might be too high, Rice told the paper in an interview. Rice said she did not want to trade away Lebanese sovereignty to Syria or allow Iran to obtain a nuclear weapon as a price for peace in Iraq, the Post reported. She also argued that neither Syria nor Iran should need incentives to promote stability in Iraq, the Post reported. "If they have an interest in a stable Iraq, they will do it anyway," Rice said. The bipartisan Iraq Study Group included talks with Iran and Syria among the key recommendations it gave the White House last week for dealing with the worsening violence in Iraq. The group, led by former U.S. Secretary of State James Baker and former Democratic Rep. Lee Hamilton, urged that its report be adopted as a whole. President George W. Bush is reviewing policy in Iraq and plans to outline a shift in course early next year. In an interview with Reuters on Friday, Rice rejected the idea that talks with Iran would, on their own, stabilize Iraq. "It's a false notion to say, oh, well, if you dealt with Iran you could stabilize Iraq. There's no evidence that that would be the case," she told Reuters. "Can Iran contribute by ceasing activities that are contributing to destabilization? Of course. But the center of gravity for dealing with the Iraq problem is in Iraq," she added. Rice said she suspected "there is some trade-off here that they're (the Iranians) seeking, and it just has costs in terms of even the sense that the United States would be prepared to kind of deal on Iraq in the context of these other things." Rice repeated the U.S. offer to hold wide-ranging talks with Iran if it first suspends uranium enrichment, which can produce fuel for nuclear power plans or atomic bombs. The United States broke off diplomatic relations with Iran in 1980 when 52 Americans were held hostage by Iranian militants who seized the U.S. embassy in Tehran after the 1979 Islamic revolution. Rice told The Washington Post that Bush could be "quite expansive" in the policy review and that the new plan would be a "departure." However, she told the Post Bush would not radically change his long-term goals or commitment to Iraq. The newspaper said Rice acknowledged that violence may not have ended before the administration leaves office in about two years' time, but said she hopes that Iraqis would "get to a place that is sustainable" by the end of 2008. Rice also said the administration would not retreat from its push to promote democracy in the Middle East and reiterated her commitment to pursuing peace between Palestinians and Israelis, the Post said. "Get ready. We are going to the Middle East a lot," Rice said.
