(Adds Rice visit to Jerusalem, Palestinian Territories) By Sue Pleming WASHINGTON, Oct 24 (Reuters) - U.S. Secretary of State Condoleezza Rice said on Wednesday she was confident a Middle East peace conference would take place this year despite Israeli-Palestinian divisions and no commitment yet from the Saudis to attend. Rice, who plans to return to Israel and the Palestinian Territories in early November, told U.S. lawmakers there was still a lot of work to do ahead of the U.S.-hosted meeting. It has not yet been officially announced but is expected to take place in Annapolis, Maryland, in late November or early December. The United States is pushing for key Arab states including Saudi Arabia to attend but Riyadh has held back on saying it will attend and is waiting to see what will be on the agenda. "The Arab states have to be in on this from the ground floor. And we've tried to bring them in from the ground floor," said Rice when asked whether Saudi Arabia would go. "We will be pressing very hard for our allies to help in this endeavor, because it will benefit, of course, the responsible Arab states if this conference is a success," she told the House of Representatives foreign affairs committee. Saudi Arabia has said it will only attend if substantive issues are discussed, such as the future of Jerusalem, refugees and the contours of a future Palestinian state. "I believe that we have some work to do still. We haven't issued any invitations, and so I don't expect that any will be accepted until we've actually issued them," Rice said. Rice, in Israel and the Palestinian Territories last week, is set to return again Nov. 4-6 for talks with Prime Minister Olmert and Palestinian President Mahmoud Abbas, the State Department said. Experts point to the weakness of both the Israeli and Palestinian leaders, particularly Abbas whose territory is divided between Hamas-run Gaza and the West Bank dominated by his Fatah forces. LAYING THE GROUNDWORK FOR TALKS "A Palestinian leader is not -- no matter how strong, by the way -- a Palestinian leader is not going to be able to make the important compromises that will be needed without the support of these Arab states," said Rice. Rice sought in her visit last week to bridge differences and get both sides to agree on a statement ahead of the conference, aimed at laying the groundwork for negotiations on a Palestinian state. State Department spokesman Sean McCormack said Rice was returning to the region to support the "serious effort underway" to agree on a joint document. "The goal is the establishment of a Palestinian state; not one born of terror, as I think it would have been in earlier times; not one that is unable to carry out its security responsibilities; not one that is not democratic and delivering for its people," Rice said. "The parties themselves I think have recognized the importance of this moment in doing precisely that," she added. California Rep. Tom Lantos, a Democrat who chairs the committee, urged Rice to put more pressure on Egypt to curb the flow of arms across their border into Hamas-run Gaza. Rice said she had pressed this issue during her meetings in Cairo last week with President Hosni Mubarak. "I did say that I thought they had not made enough progress. There needed to be further efforts," she said. Rice said the United States also planned soon to send a senior U.S. delegation to help the Egyptians, Israelis and the Palestinians deal with the smuggling. Pressed by Lantos whether it was plausible that Egypt's powerful military had been incapable of curbing the smuggling, she replied: "That's one reason that we think the senior delegation is a good idea."
