Olmert: Palestinians can achieve independent state through talks

Israeli Prime Minister Ehud Olmert today said he hoped to revive long-stalled peace efforts with the Palestinians, saying that they would be able to achieve an independent state in the West Bank and Gaza Strip through talks with Israel.

In what was billed as a major policy speech, Olmert said that Palestinians stood at a "historic crossroads" and could choose to continue on the path of violence or peace.

If they choose the peace path, Israel will ease checkpoints and release frozen funds to the Palestinian Authority.

"We will agree to leave large territories and dismantle settlements that we established," he said. "We will be willing to do this in exchange for real peace."

He also said Israel will release "many Palestinian prisoners" in return for the release of an Israeli soldier.

The capture of the soldier, Cpl Gilad Shalit, on June 25 sparked a widescale Israeli offensive in the Gaza Strip.

Palestinian militants demanded that Israel release hundreds of prisoners in exchange for Shalit, a demand Israel had publicly rejected.

But in recent days, there have been signs of progress between the two sides. Olmert and Palestinian President Mahmoud Abbas agreed to a ceasefire in Gaza that took effect yesterday morning, stirring hopes that further agreements could follow.

Olmert's speech was an effort to entice the Palestinians to return to peace talks, with the Israeli leader promising an immediate improvement in their lives.

"We cannot change the past and we will not be able to bring back the victims on both sides of the borders," he said. "All that we have in our hands to do today is to stop additional tragedies."

Chief Palestinian negotiator Saeb Erekat said the Palestinians were ready to negotiate a final peace deal.

"I believe Mr. Olmert knows he has a partner, and that is President Abbas. He knows that to achieve peace and security for all, we need to shoot for the end game," Erekat said.

As a first step, Erekat said, the two sides need to sustain the fragile ceasefire along the Israel-Gaza border and also extend it to the West Bank.

"That will open the key to a political horizon," he said.

Relations between Israel and the Palestinians plummeted in January after Hamas won Palestinian parliamentary elections. Hamas has called for Israel's destruction.