The forum challenged - and heard challenges from - leaders from the region, with Israel's foreign minister calling directly on global business leaders to pull their money out of Iran, and participants voicing concern that elections under Pakistani President Pervez Musharraf would not be free and fair.

Mr Musharraf, on a European tour to build confidence after months of political turmoil at home, told business and government leaders meeting in the Swiss Alps that the elections would be transparent.

But he brushed off complaints about human rights, saying that combating illiteracy and poverty and fostering political stability were far more important if his country was to eliminate terrorism.

'We have to attack Al-Qaeda, we have to eliminate Al-Qaeda, we have to deal with the militant Taleban,' he said. At the same time, he said Pakistan had to be 'stabilised' before any full-scale assault on radical elements.

Neighbouring Afghanistan faces a growing threat from suicide bombers, said President Hamid Karzai. But he said the practice in his country 'isn't religious, it's criminal', with gangs paying poor parents to give up their children in an apparent attempt to create turmoil that they can exploit.

Israeli Foreign Minister Tzipi Livni urged the leaders to take a personal stand against Iran's leadership by divesting from the country.

'Iran exports terrorism, destabilises the region, denies the Holocaust and threatens to wipe Israel, my home, off the map,' said Ms Livni, referring to Iranian President Mahmoud Ahmadinejad's frequent calls for the elimination of Jewish state.

'If every company here and every country here would decide to divest from Iran, this would stop Iran,' she said. 'Iran is a global threat and Iran can be stopped by you.'

Israeli Defence Minister Ehud Barak said on the sidelines of the Forum that Israel would probably launch a military operation to counter continuing rocket attacks from Gaza.

'We are not rushing to re-conquer Gaza, but we will not remove any option from the table when it comes to the security of our citizens.'

United Nations Secretary-General Ban Ki Moon said the world would help create better conditions for peace if it took more action to ease the water shortages that fuel conflict in the Middle East and elsewhere.

Mr Ban told the meeting that shortages of water contribute to poverty and social hardship in Israel, the Palestinian territories, Somalia, Chad, Nigeria, Sri Lanka, Haiti, Colombia and Kazakhstan.

'Water is running out,' he said. 'We need to adapt to this reality, just as we do to climate change. There is still enough water for all of us - but only so long as we can keep it clean, use it more wisely, and share it fairly.'

Former United States Vice-President Al Gore and U2 frontman Bono made a combined appeal for more commitment to curbing climate change and global poverty.

Mr Gore, who shared last year's Nobel Peace Prize for his efforts to fight climate change, said the problem was getting worse faster than predicted.

'We could take the whole session talking just about the new scientific evidence of the last few weeks and months,' he said. -- AP