Netanyahu Agrees to Palestinian State With Conditions

Israeli Prime Minister Benjamin Netanyahu said he would accept a Palestinian state under certain conditions, a move welcomed by the U.S. and rejected by Palestinians and Arab leaders.

A Palestinian state would have to be demilitarized and its establishment contingent on recognition of Israel as a Jewish homeland and international security guarantees, Netanyahu said.

Then “we will be ready in a future peace agreement to reach a solution where a demilitarized Palestinian state exists alongside the Jewish state,” the Israeli leader said in a speech yesterday at Bar Ilan University outside Tel Aviv.

Netanyahu had previously refrained from explicitly endorsing a Palestinian state. His address came 10 days after President Barack Obama said the creation of a Palestinian state was the “only resolution” for the Arab-Israeli conflict and that he would become personally involved in peacemaking.

“Netanyahu is certainly responding to Obama’s insistence on a two-state solution and has now given the president something to work with,” Martin Indyk, U.S. ambassador to Israel under President Bill Clinton, said in an e-mail.

Obama called the speech “an important step” and European Union foreign policy chief Javier Solana said it paved the way for a rapid restart of peace talks.

Egyptian President Hosni Mubarak, Lebanese President Michel Sleiman and Palestinian leaders said the conditions Netanyahu put on his acceptance were not conducive to peace.

Recognize Israel

“The call to recognize Israel as a Jewish state makes the situation more complicated and aborts the chances of peace,” Mubarak said today.

Netanyahu’s “intransigence on both the peace process and Palestinian refugees” requires “greater unity from Arab leaders,” Sleiman said in a statement today carried by Lebanon’s National News Agency.

Nabil Abu Rudeina, a spokesman for Palestinian Authority President Mahmoud Abbas, said Netanyahu’s conditional acceptance of a state will “not lead to a just and comprehensive peace.”

The U.S. needs to put pressure on Netanyahu to be more flexible, Hani Habib, a political scientist at Al-Aqsa University in the Gaza Strip, said in a phone interview. “If the U.S. doesn’t carry out real actions on the ground, the whole region will deteriorate,” he said.

‘Normal Life’

Obama has called for an end to all Jewish settlement building in the occupied West Bank. While Netanyahu pledges no new settlements will be built, he said that Jewish settlers have the right to a “normal life.” Netanyahu has supported construction within settlements to accommodate natural population growth.

This position “is not likely to be acceptable to President Obama because it undermines the negotiations” Indyk said.

Tel Aviv’s benchmark TA-25 index was down 3.3 percent to 851.49 at the close. The shekel weakened 0.5 percent to 3.9478.

“I don’t see any reaction to Netanyahu’s speech,” said Avi Weinreb, a trader at Clal Finance Brokerage in Tel Aviv. “In any case the Palestinians have said it is a non-starter and we aren’t getting much interest in the speech from overseas investors.”

The fate of east Jerusalem, which the Palestinians seek as the capital of their state and over which Israel has imposed its rule in a move never internationally recognized, isn’t up for negotiation, Netanyahu said.

Palestinian refugees, who fled their homes in the 1948 and 1967 Middle East wars, won’t be resettled inside Israel’s borders, he added.

‘Fundamental Prerequisite’

“A fundamental prerequisite for ending the conflict is a public, binding and unequivocal Palestinian recognition of Israel as the nation state of the Jewish people,” Netanyahu said. “To vest this declaration with practical meaning there must also be a clear understanding that the Palestinian refugee problem will be resolved outside Israel’s borders.”

Demilitarization of the Palestinian state Netanyahu envisions as part of a final peace settlement must be guaranteed by the international community.

“To achieve peace we must ensure that Palestinians can’t bring in rockets and missiles, control air space or forge alliances with Iran or Hezbollah,” Netanyahu said.

Saeb Erakat, a senior Palestinian negotiator, said the speech fell short “in every single one of the benchmarks required of Israel in line with international law and existing agreements.”

Right Direction

Tzipi Livni, leader of the Israeli opposition Kadima party that supports a two-state solution, called Netanyahu’s speech “a step in the right direction, a step forward.”

Netanyahu’s address comes a day after Iran’s Mahmoud Ahmadinejad won a second presidential term, an electoral victory that Israeli Defense Minister Ehud Barak today said was “not a good sign.”

“The Iranian threat looms large before us, as was further demonstrated yesterday,” Netanyahu said. “The great danger confronting Israel, the Middle East, the entire world and the human race, is the nexus between radical Islam and nuclear weapons.”

Iran, which has defied three rounds of United Nations Security Council sanctions demanding that it bring a halt to uranium enrichment, denies claims its program is aimed at building a nuclear weapon.

Yossi Alpher, who advised Barak, the Labor Party leader, when he was premier, said it was surprising that Netanyahu “didn’t dwell much on Iran despite the events of the last two days.”

That “was smart because he knows the U.S. doesn’t want him to appear to be hiding behind the Iranian threat in order to avoid dealing forthrightly with the Palestinian issue,” Alpher said.