Netanyahu: We will accept demilitarised Palestinian state

Israeli Prime Minister Benjamin Netanyahu yesterday accepted the US-backed goal of a Palestinian state but balked at meeting President Barack Obama's demand to stop Jewish settlement expansion.

Mr Netanyahu's reversal on statehood appeared to be a bid to end the worst rift in US-Israeli relations in a decade. But further friction appeared likely over his refusal to budge on settlements.

Mr Netanyahu said he would support the establishment of a Palestinian state - but only if Israel received in advance international guarantees the new nation would have no military and Palestinians recognised Israel as a Jewish state.

A spokesman for Palestinian President Mahmoud Abbas said Mr Netanyahu had not gone far enough. Palestinians have long resisted calls to declare that Israel is a Jewish state.

"If we receive this guarantee for demilitarisation and the security arrangements required by Israel, and if the Palestinians recognise Israel as the nation of the Jewish people, we will be prepared for a true peace agreement (and) to reach a solution of a demilitarised Palestinian state alongside the Jewish state," Mr Netanyahu said.

But he stood by his refusal to declare a complete settlement freeze sought by Washington under a 2003 peace "road map".

"We have no intention to build new settlements and to expropriate land for new settlements," Mr Netanyahu said at Bar-Ilan University near Tel Aviv.

"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 said, alluding to the concept of "natural growth" or construction within existing settlements.

Mr Obama, in a speech on June 4 aimed at repairing US relations with Muslims, said such building must stop.