US Secretary of State Condoleezza Rice criticized Saudi Arabia for not doing enough to counter extremism and defended Palestinian Authority President Mahmoud Abbas while testifying before the US Congress on Wednesday. "I am confident that President Abbas is somebody who is committed to the negotiated solution of this issue, and recognizes that only a negotiated solution is going to result in a Palestinian state," Rice said in response to a question on comments Abbas made in a recent interview, quoting him in part as saying, "I am opposed to armed struggle because we cannot succeed in it, but maybe in the future things will be different." Many interpreted those comments as supporting armed struggle. "We have all had the experience of perhaps saying things that we wish we hadn't said, and I can just tell you that this is somebody who for many, many years now has rejected violence as a means to statehood," Rice said, noting that Abbas had later said the comments were taken out of context. "I can't account for his comments. I think they were extremely unfortunate. We made that very clear to him." Rice said the State Department had also made clear to the Saudis that they needed to do more on the issue of ending incitement and standing against extremism. "While I would be the last to say that there has been anything like the kind of progress that I think we will need - [and] they will need to see, frankly, for their own good as well as the good of the world as a whole - there are discussions that are ongoing, and they do provide a mechanism by which we can monitor and then take what we know to the Saudis for discussion," she said. "This is a very high priority." Rice also stressed that Saudi Arabia and other Arab neighbors would need to take more concrete steps to help the peace process. "We need also the Arab states to be very active in supporting this effort, and some are, but frankly the Israelis are going to need to know that the outreach of the Arabs to them is coming as a part of this broader effort," she said. Rice was echoing a point Foreign Minister Tzipi Livni, in Washington this week, has made on several occasions. Nita Lowey, chairwoman of the US House appropriations foreign operations subcommittee, which called Rice to testify Wednesday, argued that Saudi Arabia should be doing more to help Palestinians on the ground, particularly by using some of its oil revenue to build homes and expand job opportunities. "When you have the oil-producing countries getting $105 a gallon, the fact that they can't show some evidence on the ground and create jobs is mind-boggling," Lowey said. "Unless the Palestinians are supported by Saudi Arabia, and the Emirates and all the other countries in the region, it's going to be very difficult for them to take that final step." Lowey has also expressed reservations about giving extra aid to the Palestinians in light of Abbas's recent comments, and put a hold on $150 million in aid allocated last year for that and other reasons. However, she recently indicated a shift in position. "I remain skeptical about the political will of a Palestinian leadership that all too often lapses into inflammatory rhetoric that belies their stated commitment to peace," Lowey said in a statement sent out late Tuesday. But she also said that "I have received some clarifications on the statements made by Palestinian President Mahmoud Abbas that called into question his commitment to the peace process. I also spoke with Secretary Rice on her meetings with Palestinian leaders last week, and she has briefed me on the assurances she received from President Abbas." In light of that information, she said, she was releasing $100m. Another $50m. is still awaiting Rice's certification before it can be sent to the PA. The Bush administration's 2009 foreign operations budget, about which Rice was ostensibly testifying, contains a $75m. allocation in economic assistance for the Palestinians, as well as $25m. for law enforcement and combating drugs. The budget also includes $2.55 billion in military aid for Israel - the first year of a new 10-year military aid program - and $30m. to help resettle refugees. Also Wednesday, the US imposed financial sanctions on a Bahrain bank that the administration says is controlled by Iran's Bank Melli, which has been accused of helping Iran spread weapons of mass destruction. The Treasury Department's action targets Future Bank B.S.C. Any bank accounts or other financial assets found in the US belonging to the bank must be frozen. Americans also are prohibited from doing business with the bank. AP contributed to this report.