The chief US diplomat told her Arab counterparts the region's peoples "have grown tired of corrupt institutions" and "stagnant" politics against what she said is a backdrop of depleting oil and water resources.

"Too few countries", she warned, have "plans" to deal with the worsening outlook.

"In too many places, in too many ways, the region's foundations are sinking into the sand. The new and dynamic Middle East that I have seen needs firmer ground if it is to take root and grow everywhere," she said.

Clinton said the region's leaders "in partnership with their peoples" have the capacity to build a bold new future where entrepreneurship and political freedoms are encouraged.

"It's time to see civil society not as a threat but as a partner," Clinton told Arab leaders in Qatar attending the Forum for the Future, a 2004 US initiative aimed at promoting such partnerships.

"It is time for the elites in every society to invest in the futures of their own countries," she said.

"Those who cling to the status quo may be able to hold back the full impact of their countries' problems for a little while but not forever," she said.

"Others will fill the vacuum," if leaders failed to offer a positive vision to give "young people meaningful ways to contribute," Clinton warned.

"Extremists elements, terrorist groups, and others who would pray on desperation and poverty are already out there competing for allegiance and competing for influence," she said.

"So this is a critical moment, this is a test of leadership for all of us," the chief US diplomat said.