Netanyahu accepts idea of Palestinian state

By Ori Lewis

RAMAT GAN, Israel (Reuters) - Israeli Prime Minister Benjamin Netanyahu responded on Sunday to uncommon pressure from Washington by finally giving his endorsement -- with conditions -- to the establishment of a Palestinian state.

But in a speech answering President Barack Obama's address to the Arab world 10 days ago, the right-wing leader's defence of Jewish settlement on occupied land may fail to dispel tension with the White House, as the two men try to set new terms for the Middle East peace process in their first months in office.

Obama called Netanyahu's shift in position on Palestinian statehood as an "important step forward," even as aides to Palestinian President Mahmoud Abbas were denouncing the speech as "sabotaging" negotiations by restating Israel's refusal to share the city of Jerusalem or accept Palestinian refugees.

Netanyahu, who has refused to back a state for Palestinians since he took office in March, said he would now endorse the establishment of a such a state -- but only if Israel received in advance international guarantees the new nation would have no army and Palestinians recognised Israel as a Jewish state.

"If we receive this guarantee regarding demilitarisation and Israel's security needs, and if the Palestinians recognise Israel as the state of the Jewish people, then we will be ready in a future peace agreement to reach a solution where a demilitarised Palestinian state exists alongside the Jewish state," Netanyahu said at Bar Ilan University near Tel Aviv.

"If (Obama) looks at the glass as half-full, this should be sufficient," Israeli political scientist Eitan Gilboa said of the speech as a whole. "But if he is looking for confrontation with Israel, he would say the glass if half-empty."

A senior European diplomat in the Middle East questioned how far it changed the substance of Israel's approach. "It's goodwill and good words but I don't think it's going to appease the Americans," the diplomat said. "He's trying to gain time."

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