Olmert puts prisoner deal at the heart of peace plea to Palestinians

Ehud Olmert yesterday put an offer to release long-term prisoners at the heart of an expansively worded appeal to Palestinian leaders to meet Israel's conditions for resumed negotiations which he insisted could lead to "a true peace".

The Israeli Prime Minister sought to build on the still distinctly shaky two-day-old ceasefire in Gaza by holding out the prospect of a "real ... dialogue" aimed at the creation of "an independent and viable Palestinian State." In a speech which went the furthest yet in abandoning his now discredited policy of unilateral withdrawals from occupied territory in favour of negotiations with the Palestinian President Mahmoud Abbas, Mr Olmert declared: "I hold out my hand in peace to our Palestinian neighbours in the hope that it won't be returned empty."

Mr Olmert said for the first time in public that in return for the safe release to his family of Gilad Shalit, the Israeli corporal abducted by Gaza militants in June, he was prepared "to release many Palestinian prisoners, even those who have been sentenced to lengthy terms".

Although he did not say so explicitly, the formulation was taken as meaning Israel has lifted its long taboo against the release of prisoners "with blood on their hands", provided the tortuous Egyptian brokered negotiations on Cpl Shalit's release succeed. At the very least, it appears to open the way for Mr Abbas to win his long struggle to secure the release of prisoners convicted for carrying out militant attacks before the Oslo accords in the 1990s.

But in a speech which was otherwise more notable for a shift of rhetoric rather than one of policy, Mr Olmert was careful not to deviate from Israel's and the international "Quartet's" conditions for dealing with the Palestinian Authority. These are: recognition of Israel; renunciation of violence; and adherence to all previous agreements.

He said that if these conditions were met by the new replacement coalition government Mr Abbas is trying to agree with Hamas, and Cpl Shalit was released, he would then invite the Palestinian President "to meet with me immediately, in order to conduct a real, open, genuine and serious dialogue between us."

Israeli and Palestinian officials would not confirm reports yesterday that Condoleezza Rice, the US Secretary of State, who is in Jordan this week, would soon be brokering a preliminary meeting between the two leaders.

Instead, in a marked shift of tone, Mr Olmert used his speech at the annual memorial for Israel's founding father David Ben Gurion to emphasise carrot rather than stick by holding out the prospect, if the conditions were met, of a restoration of the $60m-a-month Israel owes the Palestinians in withheld duties, a reduction of closures and checkpoints in the West Bank, and easing the passage of goods between the occupied territories, including Gaza, and Israel. Mr Olmert even said - in the first such declaration by an Israeli Prime Minister - that there were "positive points" in the 2002 Saudi-sponsored Beirut peace initiative promising recognition by the Arab states of Israel in return for an Israeli withdrawal to 1967 borders.

The ceasefire came under strain yesterday when Palestinian militants fired two Qassam rockets into Israel. The Fath-linked al-Aqsa Martyrs' Brigade claimed responsibility.

The breach came after Israeli troops yesterday shot dead an armed Palestinian, 22-year-old Bahar Abdel Razek, in the northern West Bank town of Qabatiya and a 55-year-old woman, Fatma Nezal, whom the Army said had carried away his weapon. Palestinian sources said it was not clear whether she had been carrying a gun when she was shot. The man was said by Palestinian sources to be a member of the Popular Resistance committees whose headquarters is in Gaza. The Army said that one of its patrols had been fired on by Palestinian militants. Both Mr Olmert and the Palestinian leadership have said they hope the ceasefire can be extended to the West Bank.

Amid a guarded and carefully qualified public welcome by moderate Palestinian leaders for Mr Olmert's speech, Saeb Erekat, the Palestinian Liberation Organisation's chief negotiator said: "I believe Mr Olmert knows he has a partner, and that is President Abbas. He knows that to achieve peace and security for all, we need to shoot for the end game." Mr Erekat admitted - and condemned - the violations of the ceasefire but added: " It can work, and I believe we have to make it work."

In private some Palestinian officials, while not dismissing the possibility that Mr Olmert's switch of approach might lead to substantive negotiations, were less optimistic. Referring to the plan for unilateral disengagement from only parts of the West Bank, on which Mr Olmert effectively fought the general election in March, one said: "This is disengagement plus."

Some officials fear that Israel is seeking to suborn Mr Abbas to ratify such a plan, possibly as an "interim state with provisional borders" which would fall far short of even the most moderate aspirations for a Palestinian state. Ghazi Hamad, spokesman for the Hamas-dominated Palestinian cabinet, went further last night, declaring: "This is a conspiracy. This is a new manoeuvre. Olmert is speaking about the Palestinian state without giving details about the borders."

Palestinian scepticism was also matched in Israel last night. One eminent analyst, Yossi Alpher, the former director of the Jaffee Centre for Strategic Studies said he believed the speech was "quintessential Olmert" in that he had "taken a ceasefire which is still fragile and problematic and tried to spin it into a major breakthrough in the peace process."

He added: "I don't think there is a foundation for doing that and I don't believe the Israeli public will either." The speech had appeared to take little account of problems in the ceasefire - including the continued importation of weaponry into Gaza by Hamas - or the doubts over Mr Abbas's capacity to deliver any deal.