Under massive pressure from the Obama administration, Israeli Prime Minister Benjamin Netanyahu last night switched track and finally accepted the idea of a Palestinian state – albeit with conditions – but refused to bow to US demands to halt settlement expansion.
Mr Netanyahu said that if Israel received international guarantees in advance that the new nation would have no military, and if Palestinians recognised Israel as specifically Jewish, he would support the establishment of a Palestinian state.
"If we get this guarantee for demilitarisation and necessary security arrangements for Israel, and if the Palestinians recognise Israel as the state of the Jewish people, we will be willing in a real peace agreement to reach a solution of a demilitarised Palestinian state alongside the Jewish state," Mr Netanyahu told an audience at Bar-Ilan University, near Tel Aviv.
The White House spokesman Robert Gibbs last night welcomed what he termed "the important step forward" of accepting Palestinian statehood, saying the US is committed to a two state solution of a Jewish state of Israel and an independent Palestinian state. But in a hint US pressure on Israel over settlements will continue, Mr Gibbs added that the president will work with all parties to see they fulfil obligations and head towards regional peace.
The Israeli leader said he wanted to ensure any Palestinian state would not be able to bring in rockets and missiles, could not establish an army or close airspace to Israel, and would not forge alliances with Iran or Hizbollah.
Without these limitations, he said, the Palestinian state would turn into a "terror base like Gaza" from where Hamas has fired rockets at southern Israel. The long-awaited policy speech was a response to Barack Obama's landmark address in Cairo this month that staked out a more even-handed American approach to the Israeli-Palestinian conflict than seen under George Bush.
But in a blow to Mr Obama, Mr Netanyahu flatly rebuffed US pressure to freeze all Israeli settlement activity in the occupied West Bank, particularly what is considered "natural growth", which might include cases where young couples might want to build bigger apartments for a family. He said: "We have no intention of building new settlements or of expropriating land to expand existing settlements. But there is a need to allow residents to lead normal lives, to allow mothers and fathers to raise their children."
He refrained from acknowledging Palestinian suffering because of their displacement by Israel's creation or from military occupation. "The simple truth is that the root of the conflict was and remains the refusal to recognise the right of the Jewish people to a state of their own, in their historic homeland."
The verbal concession of a Palestinian state was unprecedented for the Israeli hawk and likely to spark recriminations in his right-wing coalition.
A spokesman for Palestinian President Mahmoud Abbas dismissed the speech. "Netanyahu's remarks have sabotaged all initiatives, paralysed all efforts, and challenges the Palestinian, Arab and American positions," Nabil Abu Rdainah said. Senior Palestinian negotiator Saeb Erekat called on President Obama to force Israel to abide by the roadmap peace blueprint that includes freezing settlement activity.
"The peace process has been moving at the speed of a tortoise," he said. "Tonight, Netanyahu has flipped it over on its back."
The Israeli Prime Minister stressed the Palestinians must recognise Israel "as the national state of the Jewish people" – a condition refused on the grounds that it would nullify their demand for the Palestinian refugees' "right of return" to homes in the former British mandated territory of Palestine, which became Israel in 1948.
Mr Netanyahu sought to rebut President Obama's depiction of Israel's creation as being caused by centuries of persecution. "The right of a Jewish state in the land of Israel is not connected to the series of disasters inflicted on our people," he said. "Our right to set up a sovereign state here stems from the fact that the Land of Israel is the birthplace of the Jewish people."
He called on the Arab states: "Let's meet. Let's talk peace. Let's make peace. I am willing to come to Damascus, in Riyadh, in Beirut – anywhere," he said. "If we join hands there is no limit to the prosperity that will result."
Benjamin Netanyahu: In his own words
*ON PEACE TALKS: "Let's begin negotiating immediately, without preconditions. Israel is committed to international agreements and expects all other sides to fulfil their undertakings. We want to live with you in peace and good neighbourliness."
*ON PALESTINIAN STATEHOOD: "If we get this guarantee for demilitarisation and necessary security arrangements for Israel, and if the Palestinians recognise Israel as the state of the Jewish people, we will be willing, in a real peace agreement, to reach a solution of a demilitarised Palestinian state alongside the Jewish state."
*ON SETTLEMENTS: "The territorial issue will be discussed as part of the permanent accord. Until then, we have no intention of building new
settlements or of expropriating land in order to expand existing
settlements. But there is a need to allow the residents to lead normal lives, to allow mothers and fathers to raise their children."
*ON PALESTINIAN REFUGEES: "The Palestinian refugee problem must be resolved outside the borders of the state of Israel. I believe that with goodwill, and international investment, this humanitarian problem can be solved once and for all."
*ON JERUSALEM: "Israel needs defensible borders and Israel's capital, Jerusalem, will remain united, with continued freedom of worship for all religions."
*ON ABBAS VERSUS HAMAS: "Above all else, the Palestinians must decide between the way of peace and the way of Hamas. The Palestinian Authority must impose law and order in the Gaza Strip and overcome Hamas. Israel will not sit at the negotiating table with terrorists who seek to destroy it."