US, EU officials praise 'positive movement' in Netanyahu speech

The survey, published in the Haaretz daily, showed that 71 percent of respondents said they supported Netanyahu's agreement to endorse a Palestinian state and said it would help ease international pressure on Israel.

In his speech, Netanyahu said he would endorse the establishment of such a state but only if Israel received prior international guarantees that the new nation would have no army and only if Palestinians recognised Israel as a Jewish state.

Despite the support, 67 percent of those polled said the words would not help the peace process with the Palestinians and 70 percent said they could not envisage the establishment of a demilitarized Palestinian state "in the coming years".

US President Barack Obama on Monday praised what he said was "positive movement" in Israeli Prime Minister Benjamin Netanyahu's speech setting conditions for a Palestinian state.

"I think it is important not to immediately assess the situation based on commentary the day after a speech," Obama said, after meeting Italian Prime Minister Silvio Berlusconi in the Oval Office.

"I think any time an Israeli Prime Minister makes a statement, the immediate reaction tends to be negative on one side. If the other side is making a statement oftentimes the reaction is negative in Israel."

"Overall, I thought that there was positive movement in the Prime Minister's speech. He acknowledged the need for two states."

Obama acknowledged that "there were a lot of conditions" placed by Netanyahu for the creation of a Palestinian state, but added that Israeli and Palestinian conditions could be addressed in negotiations.

"What we are seeing is at least the possibility that we can restart serious talks," he said on Monday.

Obama also insisted that Israel must meet its "road map" obligations to halt the construction of settlements in the occupied West Bank and the Palestinians must put an end to violence against Israel.

"Both sides are going to have to move in some politically difficult ways in order to achieve what is going to be in the long term interests of the Israelis and the Palestinians.

"On the Israeli side that means a cessation of settlements."

"There is a tendency to try to parse exactly what this means - but I think the parties on the ground understand that if you have a continuation of settlements that in past agreements have been categorised as illegal, that is going to be an impediment to progress."

The Palestinian Authority PM described the speech as "a new blow to efforts to salvage the peace process".

Palestinian and Arab leaders have expressed frustration over Mr Netanyahu's demand that the Palestinians recognise Israel as a Jewish state, which was not included in previous Israeli-Palestinian agreements.

This would rule out any return of Palestinian refugees to Israel, a key issue in peace talks, and also creates Palestinian concern over the status of Israel's one million Israeli-Arab citizens.

Egyptian President Hosni Mubarak said the request "aborts the chance for peace".

European Union officials said Monday that they would delay any improvement in trade relations with Israel. The European leaders called Netanyahu's endorsement of Palestinian statehood a positive development, but they urged him to take more concrete steps, such as imposing a freeze on expansion of Jewish settlements in the occupied West Bank and loosening restrictions on shipments of construction material to the Gaza Strip.