Israel must give up West Bank: Olmert

JERUSALEM (AFP) - Prime Minister Ehud Olmert said Israel must give up virtually all the occupied West Bank including east Jerusalem, insisting in an interview published on Monday this was key to achieving peace with the Palestinians.

"We have to reach an agreement with the Palestinians, the meaning of which is that in practice we will withdraw from almost all the territories, if not all the territories," said Olmert, who now heads an interim government following his September 21 resignation.

"We will leave a percentage of these territories in our hands, but will have to give the Palestinians a similar percentage, because without that there will be no peace," he told the mass-circulation Yediot Aharonot newspaper.

"Including in Jerusalem," he said in reference to the predominantly Arab eastern part of the Holy City which Israel occupied and annexed after the 1967 war and which Palestinians want as the capital of their future state.

His comments are expected to stir deep controversy. Israel officially considers Jerusalem its "eternal, undivided" capital, a view Olmert, a former mayor of the city, said he shared for many years.

"I am not trying to justify retroactively what I did for 35 years. For a large portion of these years, I was unwilling to look at reality in all its depth," said Olmert.

But he stressed that giving up parts of the city is key to Israel's security, pointing to deadly July attacks by Palestinians from east Jerusalem who ploughed through crowded streets with bulldozers.

"Whoever wants to hold on to all of the city's territory will have to bring 270,000 Arabs inside the fences of sovereign Israel. It won't work," Olmert said.

"A decision has to be made. This decision is difficult, terrible, a decision that contradicts our natural instincts, our innermost desires, our collective memories, the prayers of the Jewish people for 2,000 years."

Reacting to the interview, Palestinian negotiator Saeb Erakat said Israel must "translate these statements into reality" if it is serious about wanting to achieve a peace accord.

"We haven't seen these statements translated into a piece of paper, into a concrete offer," he told AFP, stressing that "the road to peace is through ending the occupation and (Israeli) settlements in the West Bank."

Long-dormant negotiations were revived at US-hosted conference in November, with both sides pledging to reach a peace deal by the end of the year.

While little visible progress has been achieved since, Olmert expressed the conviction that "we are very close to reaching agreement." He said that also applied to indirect negotiations with long time foe Syria which were relaunched in May after an eight-year hiatus, with Turkey acting as a go-between.

He made it clear peace would come at a price for both sides, with Israel giving up the annexed Golan Heights and Syria ending its current ties with Iran and no longer backing "the Hamas and the Al-Qaeda in Iraq."

He warned however that there was no risk-free solution, without ruling out military confrontation in Syria in the coming years or renewed bloodshed in the West Bank.

"We don't know, for example, what will happen in the Palestinian Authority after January 9, 2009," he said.

On the one hand, Palestinian president Mahmud Abbas, whose term ends that day, could remain in power "with some manipulation," he said.

"But we believe that there is a very great danger that there will be a bloody clash, which will thwart any possibility of continuing negotiations and perhaps will force us to be involved in the confrontation, with bloodshed, with everything that could happen as a result."

Olmert formally submitted his resignation on September 21 amid deep political turmoil over a series graft allegations that caused police to recommend criminal indictments.

He will remain interim premier until a new government is formed. The governing Kadima party's newly elected leader, Foreign Minister Tzipi Livni is scrambling to put together a coalition in order to avert snap elections that could put the right-wing Likud party in power.