Israel backs Palestinian state ahead of EU talks

BRUSSELS - Israeli Prime Minister Benjamin Netanyahu on Sunday (14 June) backed the creation of a Palestinian state in a major speech, which had been hotly anticipated in both Washington and Brussels.

Statehood would come with heavy restrictions however - the new country would be unable to maintain an army, have weapons or control the airspace above its territory.

"If we have guarantees on demilitarisation and if the Palestinians recognise Israel as a state of the Jewish people, then we arrive at a solution based on a demilitarised Palestinian state alongside Israel," he said in the speech at Bar-Ilan University.

"Each will have its flag, each will have its anthem. The Palestinian territory will be without arms, will not control airspace, will not be able to have arms."

The offer comes after the right-wing Israeli government had for months refused to back a two-state solution to the 60 year-old conflict.

The prime minister however maintained the right of Jewish settlers to expand their existing homes on occupied Palestinian land - a practice known as "natural growth."

He said that settlers are "not the enemies of peace" and called them "our brothers and sisters."

"We have no intention of building new settlements or of expropriating land for new settlements ...but there is a need to allow settlers to lead normal lives, to allow mothers and fathers to raise their children like all families around the world."

He also ruled out the return of Palestinians who were driven out of their homes at the birth of the Israeli state in 1948. "The refugee problem must be solved outside of Israeli borders. Their return goes against the principle of Israel as a Jewish state," Mr Netanyahu said.

The "Right of Return" of the refugees and their descendants has consistently been a key demand of negotiators throughout all attempts at peace talks.

The prime minister reiterated his government's stance that Jerusalem be "united capital of Israel," - dashing Palestinian hopes they could one day situate their own capital in occupied East Jerusalem.

Israel claims Jerusalem as its capital, but no foreign governments maintain their embassies to the country there.

Diplomatic pressure

Both the European Union and the United States have put pressure on Mr Netanyahu to accept the idea of an independent Palestinian state and halt the expansion of settlements on the West Bank.

It remains to be seen whether Mr Netanyahu's words are sufficient to satisfy the EU and the US. EU diplomats have suggested the two demands must be met before Brussels will agree to an "upgrade" of EU-Israeli relations.

In his own landmark speech on 4 June, US President Barack Obama called on settlement expansion to stop.

Following the Netanyahu speech, the White House issued a statement saying that the US president welcomed "the important step forward."

On Friday, Mr Netanyahu spoke to EU chief diplomat Javier Solana, making essentially the same points as he would in his later public address.

"We will not allow the establishment of a Hamas state in the West Bank as well," he told Mr Solana, underscoring his government's requirements that any Palestinian state be demilitarised.

He also said that "natural growth" in settlement construction would continue.

"The demand to freeze construction in the settlements is unrealistic and in opposition to previous agreements and understandings under which Israel operated," he said.

EU upgrade

On Monday Israel foreign minister Avigdor Lieberman will come to Brussels for an "Association Council" meeting, while European foreign ministers are to discuss whether to move ahead with the upgrade in relations.

The Netanyahu speech will have strengthened the hand of those member states, including the Czech Republic, currently chairing the EU's six-month rotating presidency, Germany, Italy and Romania, who wish to move ahead with the upgrade.

The EU has been divided on the issue since Israel's assault on the Gaza Strip at the turn of the year.

Belgium, Sweden, Portugal and Ireland do not wish to see the upgrade move ahead without a clear commitment on Israel's side to a two-state solution, an end to settlement expansion and a lifting of the blockade on the Gaza Strip.

Although emergency aid is able to get through, items such as spare parts, water and sanitation system repair materials and agricultural inputs are blocked.

The UK, France, the Netherlands and Spain are somewhere between the two sides, with Britain quite vocal on the question of the settlements.

Development groups are hoping that the de facto suspension of the EU upgrade will be turned into a formal suspension, but realistically expect that the current situation will continue.

Mr Netanyahu's recognition of a two-state solution "changes the game," however, a source close to discussions told EUobserver.