WASHINGTON: Senator John McCain said Thursday the United States should "move urgently" to establish free trade agreements with Egypt and Tunisia but cautioned against increased spending in the region.

The Republican’s comments came shortly after President Barack Obama outlined US policy toward the Arab world in the wake of massive uprisings that have toppled two long-serving presidents and unleashed widespread unrest.

Obama had unveiled a multi-billion dollar economic plan to spur and reward democratic change in the region, modeled on the evolution of post-Soviet eastern Europe, and vowed to pursue an Israeli-Palestinian peace deal.

But McCain said in a speech at the US Institute of Peace that "no one should expect this Congress to pass a Marshall Plan for the Middle East," referring to the massive influx of US aid to Europe after World War II.

McCain, who lost to Obama in the 2008 presidential race, said the growing US budget deficit would make it difficult for Congress to approve new spending.

"If we are to going to help countries like Tunisia and Egypt to grow their economies, we will need to be much more innovative," he said.

"We should move urgently to begin negotiations on free trade agreements with Egypt and Tunisia — and to explore ideas for new free trade areas in the Middle East and North Africa."

Support should be generated from the private sector and from "wealthy partners like Qatar," he said.

McCain said he and GE CEO Jeff Immelt will lead a delegation of US business leaders to Egypt and Tunisia next month "to reinforce the message that greater democratic reform can lead to greater foreign investment."

But McCain said the first regional objective should be the "peaceful change of regimes that are irreconcilably tyrannical, anti-American and hostile to the democratic regional order that we seek to build," referring chiefly to Iran.

Other goals should include encouraging peaceful transitions to democracy, he said, and pursuing a two-state solution to the Israeli-Palestinian conflict.