By David Harris

Israeli Prime Minister Benjamin Netanyahu has done what many analysts thought he would never do: voicing support for the establishment of a Palestinian state, although with conditions.

In a long-anticipated major diplomatic policy speech on Sunday, he said that should the Palestinians recognize Israel as "the state of the Jewish people" and guarantee that their future state would be demilitarized, Israel "will be ready in a future peace agreement to reach a solution where a demilitarized Palestinian state exists alongside the Jewish state."

The peace process with the Palestinians dominated his 30-minute address, during which he also addressed the Iranian nuclear issue and voiced his willingness to enter peace talks with Arab leaders.

"I fully support the idea of a regional peace" that US President Barack Obama is leading, he said.

The premier added that while Israel has had a claim to the holyland for some 3,000 years, it cannot ignore the reality on the ground: the presence of Palestinians, who are also entitled to a flag and anthem of their own.

While calling for an immediate resumption of peace talks with the Palestinians without any precondition, Netanyahu listed several of his own, one of which is that a Palestinian state must be demilitarized.

"In a future peace agreement, the territory controlled by the Palestinians will be demilitarized, namely, without an army, without control of its airspace, and with effective security measures to prevent weapons smuggling into the territory... And obviously, the Palestinians will not be able to forge military pacts," he said.

Regarding other key issues, he said that any solution for Palestinian refugees would have to be found outside the borders of Israel and that Jerusalem would remain the unified capital of Israel.

On the thorny settlement issue, Netanyahu said that there would be no new settlements constructed in the West Bank, nor would there be any more land expropriations from Palestinians.

Yet he hinted that the so-called "natural growth" of settlements would be allowed, a stance rejected by the Obama administration.

An opinion poll published on Sunday immediately before Netanyahu's speech showed an increase in support for a two-state solution among Israelis.

Some 63 percent now favor the creation of a Palestinian state alongside Israel, compared with 59 percent three months ago.

"People realize that this solution has international legitimacy and so some joined the bandwagon," said Yaacov Shamir, the Israeli coordinator of the survey, conducted by the Hebrew University of Jerusalem and the Palestinian Center for Policy and Survey Research.

"This is understandable since Obama promises to pressure in this direction, in his landmark address in Cairo earlier this month," added Shamir.

The public relations bid to sell Netanyahu's line got underway on Sunday when his foreign minister Avigdor Lieberman set off for a tour of Europe and North America.

Netanyahu's spin doctors have also organized meetings with local and foreign media outlets over the next 24 hours to push home the premier's messages.

However, what Netanyahu wants to see most is that some in the corridors of power overseas would accept his message, first and foremost the White House.

Netanyahu knows he addressed several points raised by Obama to the Americans' satisfaction, yet on some others, his speech apparently fell short of expectations.

"We're facing a crossroads in the relation with the United States for a very simple reason: the United States sees an opportunity and they're probably right," said Galia Golan, an Israeli political expert and a leading figure in Israel's Peace Now movement.

"We have a public that's ready for compromise and a two-state solution, the Palestinians are ready for a two-state solution. If we would go for it, Hamas wouldn't be able to resist it and the settlers wouldn't be able to resist," Golan said.

Netanyahu's speech immediately came under fire from Palestinian officials, with senior Palestinian negotiator Saeb Erekat saying that "his speech was deceiving and I call on those who listened to this speech not to be deceived."

The Palestinians have long been demanding that Israel totally halt settlement activity, and stressing that imposing limitations on their future Palestinian state is not the true spirit of the two-state solution.

The parties have so far laid their first cards on the table, and also recognized that these are merely initial negotiating positions and much more will have to be done in order to reach any final-status agreement.

While many in the Arab world were disappointed with Netanyahu's speech, the traditionally hawkish Israeli leader has for the first time uttered a phrase that few if any Palestinians ever thought they would hear from him. As the White House responded, it marked an important step forward along the rugged road toward peace.

(Xinhua News Agency June 15, 2009)