First of all what I would like to do is to explain how closely the histories of our two countries have been intertwined for 200 years and over that time no country has had a deeper involvement here. A unique relationship of which we in the UK are intensely proud. This is a partnership too that has left us with a deep well of shared experience, respect and friendship. We each know how the other thinks, reacts, and dreams. We trust each other. I understand that London is often referred to here as the eighth Emirate and there were something like half a million visits from the UAE to the UK last year and there is news almost every day of a new Emirates acquisition in the UK.

While here the UK is privileged to have over 120,000 residents, so I understand, and over 1 million British tourists. Over 100,000 of you are here in Dubai alone. Dubai is now the favourite long haul destination for British travellers after New York. And the widespread use of the English language a priceless asset.

Add to that a flourishing business relationship. UAE is the UK's ninth largest export market. We export more here than to China. Over the last 5 years the UK's trade figures have risen by a factor of 6 and they doubled again last year. The investment relationship is equally important. We strongly welcome Emirate investment into the UK, for example Dubai Ports World takeover of P & O. British companies for their part are heavily involved in Dubai's big projects, like the HSBC, Standard Chartered, Lloyds TSB and Barclays have all committed to the Dubai International Finance Centre.

We therefore decided a few months ago to make the UAE one of the British government's top ten priority business partners over the next 5 years. And standing here and looking around at the very distinguished group of business people I have here, I can see how right that decision is already proving.

We need to build for the future across all fields: political, security and defence, commercial, educational, cultural, health - on which I am delighted to hear of the important and ground breaking work by Imperial College London at their Diabetes Institute which opened in Abu Dhabi this summer. At the cutting edge of technology this is an institute which represents exactly where our two countries should be together.

So I have agreed in my talks with Their Highnesses, the President, the Prime Minister and the Crown Prince that we shall be establishing

regular talks at senior official level on the regional security challenges facing our two countries;

regular exchange between our senior business leaders on how best both to maximise our commercial enterprise and to work together on the common challenges that face us in making best use of our human capital, above all through education and training and through the most up to date methods of healthcare;

greater educational and training exchange. Yesterday I was present at the signature and agreement between the London School of Economics and the Emirates Foundation on the establishment of the Sheikh Zayed Chair in Regional Studies at the LSE's new Middle East Centre, alongside a programme of educational exchange and training in both countries.

The UAE however is also an interesting and telling place in which to conclude my visit to this region and I want to spend the rest of my address in saying to you how I think not just the issues around this region are developing, but what our role in helping them develop in a benign way should be.

Too often discussions on the Middle East and Muslim opinion are conducted as if there are only two views - the extreme Islamist view and the view of the West. In fact as the last 7 days have shown, the vast bulk of opinion in the wider region is moderate and seeks peace. That goes for the people of the region as well as many governments. Our task is to mobilise that desire and harness it to ensure that all people here can have opportunities for safety, security, democracy, freedom and economic prosperity. Otherwise we allow the forces of extremism to win in the absence of a clear and constantly articulated alternative vision.

At first flush it may seem odd to see a journey that has so many different and distinctive stopping points as one journey with a common theme and sense of destination. So what is it that joins together in a single narrative the usual December Brussels Council of the European Union and the journey to conclusion here in this extraordinary modern adventure called Dubai? Well in Brussels, Europe agreed, after some wrangling, to continue with Turkey's accession to the European Union. Of course the criteria for membership should be met, as for any applicant nation. But whereas with previous accessions, of smaller countries more closely identified with traditional notions of Europe, the objective criteria were occasionally stretched by subjective politics to allow membership: in Turkey's case the danger is the opposite: that even if the criteria are met politics intervenes to deny membership. Be under no illusion: were that to happen, the Muslim world would conclude that the religious affiliation of Turkey was the reason, a conclusion with massive strategic implications for all of us.

Turkey itself has seen economic and political transformation occurring under Prime Minister Erdogan's leadership, but given strength by the prospect for Turkey of European Union accession. Here is a Muslim nation showing how keen it is to take its place in the modern world, eschewing extremism, embracing democracy, actively seeking the international community's support in resolving the longstanding and bitter dispute over a divided Cyprus.

Like so many Arab nations, Egypt is striving to modernise but worried that in the very process of opening up, malign and extreme elements abuse the good intentions of the modernisers.

In Iraq, literally and daily a life and death struggle is taking place between a government elected by the people, a multinational force supporting them in that cause, and internal sectarian extremists, backed by external forces who want either a secular dictatorship or a sectarian theocracy to govern the country. Down in Basra, I met members of the British Armed Forces doing heroic service for their own nation and the wider global community. And they had one message: the ordinary people of Basra want peace but there were extreme elements, backed from the outside, determined to thwart their will.

So on Monday, to the most intractable dispute in the Middle East: Israel and Palestine. What do we find there? An Israeli Government that has now agreed to support the creation of a Palestinian state: a Palestinian President who wants to negotiate its creation alongside an open recognition of Israel. But because the Fatah Party appeared unable to make progress towards the two state solution and seemed out of touch, the people elected Hamas. The people are now stranded between an elected President who wants to do the right thing but is blocked, and an elected government which refuses to countenance the right of Israel to exist as a state and where again there are extremist elements utterly bent on denying any possibility of peace through the use of terror.

Yet today we speak in the modern miracle that is the UAE: a Muslim country that in a few decades has made itself into an oasis of economic enterprise, tourism and openness to the world. My reflection is that here, unlikely as it seems at this moment, is what Basra or Gaza could be, were their people not so savagely let down by the politics of their countries.

This journey is already pretty crowded, as you can see, but actually we could have added Afghanistan where Afghan people and coalition forces try to drive back Taleban extremists who recently executed a teacher in front of his class for teaching girls in his school. Or Sudan, or Somalia. We could describe the voyage of modernisation currently undertaken by President Musharraf in Pakistan. In fact, were there time, we could discuss this issue in one form or another by reference to most major countries and regions in the world. In Britain, but also across the rest of Europe, a debate is happening about how we remain tolerant, treat equally all people whatever their race or religion, but protect that tolerance against extreme elements who seek to divide us on religious or ethnic grounds.

The lesson of all of this I see as startlingly real, clear and menacing. There is a monumental struggle going on worldwide between those who believe in democracy and modernisation, and forces of reaction and extremism. It is the 21st century challenge. Yet a great part of our own opinion either thinks there is no common theme to it all; or if there is, is inclined to believe that it is our - that is America and its allies - fault that this is so.

In any other situation in which terrorists with almost incredible wickedness butcher completely innocent people, provoke sectarian conflict, spread chaos and despair, in almost any other situation we would say well our response should be to stand up and fight back. In Iraq, in Afghanistan, but seeping across the board, voices instead say: we shouldn't be involved: better leave well alone; it is none of our business.

Here are elements of the Government of Iran openly supporting terrorism in Iraq to stop a fledgling democratic process, trying to turn out a democratically elected Government in Lebanon, flaunting the international community's desire for peace in Palestine - at the same time as denying the Holocaust and trying to acquire a nuclear weapon capability: and yet a huge part of world opinion is frankly almost indifferent. It would be bizarre if it weren't so deadly serious.

We have in my view to wake up. These forces of extremism - based on a warped and wrong-headed misinterpretation of Islam - aren't fighting a conventional war, but they are fighting one against us, "us" being not just the West, still less simply America and its allies, but "us", as all those worldwide who believe in tolerance, respect for others and liberty.

We must mobilise our alliance of moderation in this region and outside of it to defeat the extremists. Nothing matters more. Nothing should stand in the way of it. Nothing should be more galvanising of our collective will.

That is why Europe must not turn its back on Turkey. We need Turkey to succeed, we need its influence not least in this region for the good. The fact that it is a Muslim nation is an advantage not a risk.

We need to support Israeli and Palestinian people in their search for peace. There are three immediate priorities: an Office of the President of Palestine that is given the means to improve its capacity and effectiveness to act in the interests of the Palestinian people; an early meeting between Prime Minister Olmert and President Abbas to make early progress on outstanding preliminary issues; and as soon as possible a relaunch of the political process leading to a two state solution. These priorities are deliverable. But they need to be delivered.

We must ensure that everything conceivable is done to help the Afghan and Iraqi Governments achieve stability. The so-called 'cutting and running', to use that familiar phrase, would not just be a breach of faith. It would be disastrous for our own wider interests.

We must support and empower moderate and modernising governments and people everywhere in this region. We must recognise the strategic challenge the Government of Iran poses; not its people, possibly not all of its ruling elements, but those presently in charge of its policy. They seek to pin us back in Lebanon, in Iraq, in Palestine. Our response should be to expose what they are doing, build the alliances to prevent it; and pin them back across the whole of this region.

To do all of this, we need the open and clear backing of the countries in this region who know better than we what is happening and why.

In other words, at every stage and in every aspect of this struggle, we should be acting decisively in favour of those who share our values. We should stop buying into this wretched culture of blaming ourselves, of pandering to a wholly imagined grievance on the part of those we are fighting. We should take on the nonsense that says when terrorists who claim to be Muslim kill innocent and true Muslims in Iraq or Afghanistan, that it is somehow the fault of American and British soldiers being present there. We should proclaim what is so obviously correct, that what holds back the Palestinian people are not those of us striving to make a reality of a stable, viable Palestinian state next door to Israel, but those who pretend to champion that cause but deny the very two state solution that is Palestine's only hope of salvation.

The suffering of so many people in this region is indeed tragic. Yet here in the United Arab Emirates we see the enormous potential for prosperity and progress. If "our" policy has a fault, it is that we are too shy of acting boldly to bring about change, to give succour to those trying to live a life for the better.

Out of this region with its complex, fascinating history has come the challenge. Within this region, will come the solution. But everywhere the impact of its future - for good or ill - will be felt. It is not too late. But in my view it is urgent.