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Lieberman insistently refused to rule in, or rule out, Palestinian statehood alongside Israel as the essence of a permanent accord, but emphatically endorsed Netanyahu's declared desire not to rule over a single Palestinian.

The foreign minister spoke as US Secretary of State Hillary Clinton warned Israel on Thursday that it risks losing Arab support for combating threats from Iran if it rejects peace negotiations with the Palestinians. Clinton said Arab nations had conditioned helping Israel counter Iran on Jerusalem's commitment to the peace process.

The fact was, said the Israel Beiteinu leader, that the Palestinian issue was "deadlocked" despite the best efforts of a series of dovish Israeli governments. "Israel has proved its good intentions, our desire for peace," he said. The path forward, he said, lay in ensuring security for Israel, an improved economy for the Palestinians, and stability for both. "Economy, security, stability," he repeated. "It's impossible to artificially impose any political solution. It will fail, for sure. You cannot start any peace process from nothing. You must create the right situation, the right focus, the right conditions."

Equally emphatically, he said no peace proposal that so much as entertained the notion of a "right of return" to Israel for Palestinian refugees could serve as a basis for negotiation. "It cannot be on the table. I'm not ready to even discuss the 'right of return' of even one refugee," he said. But he also made clear that Palestinian recognition of Israel as a Jewish state was not a precondition for progress. "You know, we don't want to torpedo the process," he said. "But somebody who really wants a solution, somebody who really desires a real peace and a real agreement, must realize that this would be impossible to achieve without recognizing Israel as a Jewish state."

Lieberman said the new government would have no dealings with Hamas, which needed to be "suffocated," and that the international community also had to maintain the long-standing Quartet preconditions for dealing with the Islamist group.

The real reason for the deadlock with the Palestinians, said Lieberman, "is not occupation, not settlements and not settlers. This conflict is really a very deep conflict. It started like other national conflicts. [But] today it's a more religious conflict. Today you have the influence of some nonrational players, like al-Qaida."

And the biggest obstacle to any comprehensive solution, he said, "is not Israel. It is not the Palestinians. It's the Iranians."

Lieberman said the prime responsibility for thwarting Iran's march to a nuclear capability lay with the international community, not Israel, and especially the five permanent members of the Security Council. He was confident that stringent economic sanctions could yet achieve the desired result, and said he did not even "want to think about the consequences of a crazy nuclear arms race in the region."

He said it would be "impossible to resolve any problem in our region without resolving the Iranian problem." This, he said, related to Lebanon, Syria and problems with Islamic extremist terror in Egypt, the Gaza Strip and Iraq.

Nonetheless, Lieberman stressed that Israel did not regard stopping Iran as a precondition for Israeli efforts to make progress with the Palestinians. Quite the reverse, he said. "No, we must start with the Palestinian issues because it's our interest to resolve this problem. But there should be no illusions. To achieve an agreement, to achieve an end of conflict, with no more bloodshed, no more terror, no more claims - that's impossible until Iran [is addressed]."

Noting what he called Syria's deepening ties with Iran, Lieberman said he saw no point whatsoever in resuming the indirect talks with Damascus conducted by the last government. "We don't see any good will from the Syrian side," he said. "Only the threats, like 'If you're not ready to talk, we'll retake the Golan by military action...'"

He and others said that Israel agreed to the road map and to move ahead with the removal of settlements and soldiers from Gaza in 2005 on the understanding that settlement growth could continue. But a former senior official in the Bush administration disagreed, calling the Israeli characterization “an overstatement.”“There was never an agreement to accept natural growth,” the official said Tuesday, speaking on the condition of anonymity because of the delicacy of the matter. “There was an effort to explore what natural growth would mean, but we weren’t able to reach agreement on that.”

The former official said that Bush administration officials had been working with their Israeli counterparts to clarify several issues, including natural growth, government subsidies to settlers, and the cessation of appropriation of Palestinian land. The United States and Israel never reached an agreement, though, either public or private, the official said.

A second senior Bush administration official, also speaking anonymously, said Wednesday: “We talked about a settlement freeze with four elements. One was no new settlements, a second was no new confiscation of Palestinian land, one was no new subsidies and finally, no construction outside the settlements.” He described that fourth condition, which applied to natural growth, as similar to taking a string and tying it around a settlement, and prohibiting any construction outside that string. But, he added, “We had a tentative agreement, but that was contingent on drawing up lines, and this is a process that never got done, therefore the settlement freeze was never formalized and never done.”A third former Bush administration official, Elliott Abrams, who was on the National Security Council staff, wrote an opinion article in The Washington Post in April that seemed to endorse the Israeli argument.

But the Israeli officials complained that Mr. Obama had not accepted that the previous understandings existed. Instead, they lamented, Israel now stood accused of having cheated and dissembled in its settlement activity whereas, in fact, it had largely lived within the guidelines to which both governments had agreed.

On Monday, Mr. Netanyahu said Israel “cannot freeze life in the settlements,” calling the American demand “unreasonable.”

Dov Weissglas, who was a senior aide to Prime Minister Ariel Sharon, wrote an opinion article that appeared Tuesday in Yediot Aharonot, a mass-selling newspaper, laying out the agreements that he said had been reached with officials in the Bush administration.

He said that in May 2003 he and Mr. Sharon met with Mr. Abrams and Stephen J. Hadley of the National Security Council and came up with the definition of settlement freeze: “no new communities were to be built; no Palestinian lands were to be appropriated for settlement purposes; building will not take place beyond the existing community outline; and no ‘settlement encouraging’ budgets were to be allocated.”He said that Condoleezza Rice, the national security adviser at the time, signed off on that definition later that month

In April 2004, President Bush presented Mr. Sharon with a letter stating, “In light of new realities on the ground, including already existing major Israeli population centers, it is unrealistic to expect that the outcome of final status negotiations will be a full and complete return to the armistice lines of 1949.” That letter, Mr. Weissglas said, was a result of his earlier negotiations with Bush administration officials acknowledging that certain settlement blocks would remain Israeli and open to continued growth.

The Israeli officials said that no Bush administration official had ever publicly insisted that Israel was obliged to stop all building in the areas it captured in 1967. They said it was important to know that major oral understandings reached between an Israeli prime minister and an American president would not simply be tossed aside when a new administration came into the White House.Of course, Mr. Netanyahu has yet to endorse the two-state solution or even the road map agreed to by previous Israeli governments, which were not oral commitments, but actual signed and public agreements.

Mr. Abrams acknowledged that even within those guidelines, Israel had not fully complied. He wrote: “There has been physical expansion in some places, and the Palestinian Authority is right to object to it. Israeli settlement expansion beyond the security fence, in areas Israel will ultimately evacuate, is a mistake.”

The U.S. government supported all this, but asked Mr. Sharon for two more things. First, that he remove some West Bank settlements; we wanted Israel to show that removing them was not impossible. Second, we wanted him to pull out of Gaza totally -- including every single settlement and the "Philadelphi Strip" separating Gaza from Egypt, even though holding on to this strip would have prevented the smuggling of weapons to Hamas that was feared and has now come to pass. Mr. Sharon agreed on both counts.

On April 14, 2004, Mr. Bush handed Mr. Sharon a letter saying that there would be no "right of return" for Palestinian refugees. Instead, the president said, "a solution to the Palestinian refugee issue as part of any final status agreement will need to be found through the establishment of a Palestinian state, and the settling of Palestinian refugees there, rather than in Israel."

On the major settlement blocs, Mr. Bush said, "In light of new realities on the ground, including already existing major Israeli populations centers, it is unrealistic to expect that the outcome of final status negotiations will be a full and complete return to the armistice lines of 1949." Several previous administrations had declared all Israeli settlements beyond the "1967 borders" to be illegal. Here Mr. Bush dropped such language, referring to the 1967 borders -- correctly -- as merely the lines where the fighting stopped in 1949, and saying that in any realistic peace agreement Israel would be able to negotiate keeping those major settlements.

On settlements we also agreed on principles that would permit some continuing growth. Mr. Sharon stated these clearly in a major policy speech in December 2003: "Israel will meet all its obligations with regard to construction in the settlements. There will be no construction beyond the existing construction line, no expropriation of land for construction, no special economic incentives and no construction of new settlements."

Ariel Sharon did not invent those four principles. They emerged from discussions with American officials and were discussed by Messrs. Sharon and Bush at their Aqaba meeting in June 2003.

They were not secret, either. Four days after the president's letter, Mr. Sharon's Chief of Staff Dov Weissglas wrote to Secretary of State Condoleezza Rice that "I wish to reconfirm the following understanding, which had been reached between us: 1. Restrictions on settlement growth: within the agreed principles of settlement activities, an effort will be made in the next few days to have a better definition of the construction line of settlements in Judea & Samaria."

Stories in the press also made it clear that there were indeed "agreed principles." On Aug. 21, 2004 the New York Times reported that "the Bush administration . . . now supports construction of new apartments in areas already built up in some settlements, as long as the expansion does not extend outward."

n recent weeks, American officials have denied that any agreement on settlements existed. Secretary of State Hillary Clinton stated on June 17 that "in looking at the history of the Bush administration, there were no informal or oral enforceable agreements. That has been verified by the official record of the administration and by the personnel in the positions of responsibility." These statements are incorrect. Not only were there agreements, but the prime minister of Israel relied on them in undertaking a wrenching political reorientation -- the dissolution of his government, the removal of every single Israeli citizen, settlement and military position in Gaza, and the removal of four small settlements in the West Bank. This was the first time Israel had ever removed settlements outside the context of a peace treaty, and it was a major step.

It is true that there was no U.S.-Israel "memorandum of understanding," which is presumably what Mrs. Clinton means when she suggests that the "official record of the administration" contains none. But she would do well to consult documents like the Weissglas letter, or the notes of the Aqaba meeting, before suggesting that there was no meeting of the minds.

The political elites in Europe have not yet responded to these problems. There have been no significant public debates; neither about the euro, EU expansion, a proposed constitution, nor the European Union's responsibilities in the Balkans and Afghanistan. Instead, Europe's political elites have remained silent. EU policies are determined, following the pre-1989 Western European tradition, by a cartel of political elites that is insulated from the democratic public. The more that Europe lacks the acceptance of its citizens, the harder it will befor the Union to meet the coming geopolitical challenges.

The assumption that the European Union lacks competence in foreign and security policy is misguided. For nearly a decade, the European Union has had access to the entire spectrum of institutional capacities -- including military capability -- that is necessary for active participation in global politics. It is an equally unconvincing argument that the 27 member states are simply too difficult to coordinate to actively engage in international politics. On the contrary: the foreign and security strategy of the European Union is remarkably consistent and coherent, from effective multilateralism, to peaceful conflict resolution, to addressing the problem of fragile statehood. Europe only needs to match its words with action. Member states need to abandon their vain attachment to national prerogatives and speak with one foreign policy voice. Here the largest member states -- Great Britain, France, and Germany -- have often been the biggest hindrance.

The era of the G-7 or G-8, in which the western industrial states (and Russia) could keep to themselves, is over. There is no alternative to a G-20 that systematically includes developing nations from all regions of the world into the process of global governance.

Until now, the European Union -- despite its inclusion in the Middle East Quartet -- has always been reluctant to propose solutions to the conflict between Israel and Palestine. Instead, Europe has essentially hidden behind the United States. Now, after eight years of the Bush administration, America has lost nearly all of its credibility, and it is going to be a while before President Obama can do anything to significantly reestablish it. There is a need, in other words, for the European Union and its member states to play a larger role -- not least, because the European Union has pro-Arab as well as pro-Israeli positions represented in its institutions and among its member states. The European Union could credibly serve as an honest broker in the region -- if it only wanted to.

Unfortunately, the countries of the European Union allow themselves to be played against one another yet again -- especially along the economic fault line between old and new member states. Europe's answer to the economic and financial crisis is not encouraging. Instead of a coordinated reaction of the EU member states, national measures have taken priority. Even Germany -- despite all its pro-European rhetoric -- has shown little appetite for cooperation.This failure is particularly frustrating in light of the fact that Europe has the world's best institutional capacity to develop integrated answers to crossborder economic challenges.

In addition, there is still a clear asymmetry between negative and positive integration, as political scientist Fritz Scharpf diagnosed in the mid-1990s. The creation of an internal market continues to trump the development of economic and social policies that can steer and correct that very market. It is no accident that the call for a "social Europe" is getting ever louder. The inability for European governments to coordinate their responses to the financial crisis has contributed to the legitimation crisis of European integration.

The post-Cold War era is over. Europe has no choice but to orient itself to the challenges of the future. Before anything else, the European Union needs to gain the approval and trust of its own citizens. The failed referenda pose less of a threat to Europe than does the continent's growing Euro-skepticism and the silence of European elites in the face of criticism "from below." Those who are believers in Europe and European unification must actively take on the challenge of convincing others.

The deceased politician and scholar Peter Glotz, just several weeks after the end of the fateful year 1989, wrote in this very publication that "the decisive question of the next decade will be whether the European elites manage to overcome the narrow categories of the nation state. ... In Europe, the nations are too weak to engage in global politics; at the same time, they are strong enough to prevent the development of an effective supranational European politics." Twenty years later, those observations have unfortunately lost none of their truth.

SPIEGEL: What are you hoping will happen during your visit with US President Barack Obama this week?

Zardari: That is a million dollar question. And I am hoping the answer will be billions of dollars, because that is the kind of money I need to fix Pakistan's economy. The idea is to request that the world appreciate the sensitivity of Pakistan and the challenges it faces and to treat us on par with General Motors, Chrysler and Citibank.

our wife, Benazir Bhutto, who was assassinated by terrorists, feared that your country's nuclear weapons could fall into the hands of Islamist extremists. Do you share this fear? Zardari: If democracy in this country fails, if the world doesn't help democracy -- then any eventuality is a possibility. But as long as democracy is there, there is no question of that situation arising. All your important installations and weaponry are always under extra security. Nuclear weapons are not Kalashnikovs -- the technology is complicated, so it is not as if one little Taliban could come down and press a button. There is no little button. I want to assure the world that the nuclear capability of Pakistan is in safe hands.

Doctors working in the no-fire zone say that over the past week they have treated hundreds of civilians, accusing the Sri Lankan government of shelling the zone; one claimed that about 50 civilians are dying every day. The government denies these charges and there is no way of proving the claims because independent media are barred from entering the area.

Others among the 22 female inmates held behind barbed wire confirmed that they had received orders from the LTTE to use hand grenades to commit suicide rather than be taken alive. The instruction was simple: hold the grenade against your head or stomach and detonate it.

What appears to have turned some former supporters against the LTTE was its decision in 2007 to start conscripting fighters to fill their depleted ranks. Niraiesai, 26, says she was given no choice but to fight. She had just finished teacher training when the Tigers turned up at her home in 2007. Every family had to send one member to fight, they were told. "Many people didn't like it, but they compelled us so we had to join."

Niraiesai was held in a military camp for two months, then sent to Ambepusse. She says the Tigers stole her youth. "For 25 years, we were ruled by the LTTE and we believed them. But after 2007 people hated them because they compelled the children to fight. We were brainwashed that the Sinhalese were bad and we believed them," she says. "But now I think we can live together."

tremendous efficiencies can be found in the online revolution. Publishers no longer have to pay for expensive presses or trucks. They can operate with a much smaller staff. Start ups can create news and entertain communities at a much smaller cost by forming the kind of networks I described. There are many other new options: A hyperlocal journalism approach, for instance. Or platforms with a whole of networks consisting of bloggers, next to foundations, next to publicly supported reporting, next to volunteers. But we will also investigate whether a paid content model can still work in the digital age.

Jarvis: There is simply no scarcity of news online, so it is hard to return to old monopolies from the print era. In discussions, I often hear from media executives that readers should pay for content online. We need to get past such emotional debates. It is not about what should be done, it is about simple economics. When the New York Times stopped charging for content online, visits to its site increased by 40 percent. You will never get the ad rates you got in the past for print for those links. But media outlets can use them to generate other income. In Germany, Axel Springer is making a lot of money from merchandising online. BILD.de just sold 21,000 video cameras to readers who are then using them to take pictures that they send to the newsrooms. Also, news organizations could target smaller advertisers more aggressively for online ads.

SPIEGEL ONLINE: Some are calling for government subsidies for print outlets. Others suggest a fee for computer and mobile phone sales because without free media offerings, these devices would be a lot less attractive to consumers. Jarvis: To me, such proposals seem like waiting for the new knight to bail out the industry. Get over it. It won't happen. Media outlets need to face the new economic competition. The same is true for the possibility of government intervention. How should a government decide what outlet deserves support and what does not? The idea is absurd.

Jarvis: I like print, but the economics don't add up. I believe this year will bring a true sea change: The one size fits all approach is coming to an end. More and more papers will either close or go solely online. Legendary investor Warren Buffett just said: I would never invest in newspapers. That is coming from a man who sits on the board of the Washington Post. Why should anyone throw money after a dying business model?

The allegations date back to November 2001, when as many as 2,000 Taliban prisoners died in transit after surrendering during one of the regime's last stands, according to a State Department report from 2002.

Witnesses have claimed that forces with the U.S.-allied Northern Alliance placed the prisoners in sealed cargo containers over the two-day voyage to Sheberghan Prison, suffocating them and then burying them en masse using bulldozers to move the bodies, according to the State Department report. Some Northern Alliance soldiers have said that some of their troops opened fire on the containers, killing those within.

A former U.S. ambassador for war crimes issues, Pierre Prosper, told the Times that the Bush administration was reluctant to investigate the deaths, even though Dostum was on the payroll of the CIA and his soldiers worked with U.S. special forces in 2001.

Dostum was suspended from his military post last year on suspicion of threatening a political rival, but Afghan President Hamid Karzai recently rehired him, the Times reported.

Speaking to a large crowd in the holy city of Mashhad, Ayatollah Khamenei said Iran had "no experience with the new American government and the new American president". One gesture the US administration could make would be to ease some sanctions on passenger aeroplanes and spare parts Cyrus, Tehran Iran views: Obama message "We will observe them and we will judge," he said. "If you change your attitude, we will change our attitude." In the speech, which was carried live by Iranian television, he said Iran was yet to see such a change. "What is the change in your policy?" he asked.

Speaking to a large crowd in the holy city of Mashhad, Ayatollah Khamenei said Iran had "no experience with the new American government and the new American president".

Speaking to a large crowd in the holy city of Mashhad, Ayatollah Khamenei said Iran had "no experience with the new American government and the new American president". One gesture the US administration could make would be to ease some sanctions on passenger aeroplanes and spare parts Cyrus, Tehran Iran views: Obama message "We will observe them and we will judge," he said. "If you change your attitude, we will change our attitude." In the speech, which was carried live by Iranian television, he said Iran was yet to see such a change. "What is the change in your policy?" he asked. "Did you remove the sanctions? Did you stop supporting the Zionist regime? Tell us what you have changed. Change only in words is not enough."

SPIEGEL: A few weeks ago, you visited New Delhi and said India and Pakistan have done enough damage to each other and that it is time to find a solution. Do you view yourself as as a future ambassador for peace between the two countries? Musharraf: If the Pakistan government wants me and if the Indians also trust me, then I can be of some use.

I turn to you, our Palestinian neighbors, led by the Palestinian Authority, and I say: Let’s begin negotiations immediately without preconditions.Israel is obligated by its international commitments and expects all parties to keep their commitments. We want to live with you in peace, as good neighbors.

I do not want war.  No one in Israel wants war.

to our regret, this is not the case with the Palestinians. The closer we get to an agreement with them, the further they retreat and raise demands that are inconsistent with a true desire to end the conflict. Many good people have told us that withdrawal from territories is the key to peace with the Palestinians. Well, we withdrew. But the fact is that every withdrawal was met with massive waves of terror, by suicide bombers and thousands of missiles. We tried to withdraw with an agreement and without an agreement.  We tried a partial withdrawal and a full withdrawal.  In 2000 and again last year, Israel proposed an almost total withdrawal in exchange for an end to the conflict, and twice our offers were rejected. We evacuated every last inch of the Gaza strip, we uprooted tens of settlements and evicted thousands of Israelis from their homes, and in response, we received a hail of missiles on our cities, towns and children.  The claim that territorial withdrawals will bring peace with the Palestinians, or at least advance peace, has up till now not stood the test of reality.

Territorial withdrawals have not lessened the hatred, and to our regret, Palestinian moderates are not yet ready to say the simple words: Israel is the nation-state of the Jewish people, and it will stay that way.

But we must also tell the truth in its entirety: within this homeland lives a large Palestinian community. We do not want to rule over them, we do not want to govern their lives, we do not want to impose either our flag or our culture on them.

The Palestinian leadership must arise and say: “Enough of this conflict. We recognize the right of the Jewish people to a state of their own in this land, and we are prepared to live beside you in true peace.”  I am yearning for that moment, for when Palestinian leaders say those words to our people and to their people, then a path will be opened to resolving all the problems between our peoples, no matter how complex they may be.

Therefore, a fundamental prerequisite for ending the conflict is a public, binding and unequivocal Palestinian recognition of Israel as the nation state of the Jewish people.  To vest this declaration with practical meaning, there must also be a clear understanding that the Palestinian refugee problem will be resolved outside Israel’s borders.  For it is clear that any demand for resettling Palestinian refugees within Israel undermines Israel’s continued existence as the state of the Jewish people.

Tiny Israel successfully absorbed tens of thousands of Jewish refugees who left their homes and belongings in Arab countries.  Therefore, justice and logic demand that the Palestinian refugee problem be solved outside Israel’s borders.

the connection between the Jewish people and the Land of Israel has lasted for more than 3500 years.  Judea and Samaria, the places where Abraham, Isaac, and Jacob, David and Solomon, and Isaiah and Jeremiah lived, are not alien to us.  This is the land of our forefathers. The right of the Jewish people to a state in the land of Israel does not derive from the catastrophes that have plagued our people. True, for 2000 years the Jewish people suffered expulsions, pogroms, blood libels, and massacres which culminated in a Holocaust - a suffering which has no parallel in human history.  There are those who say that if the Holocaust had not occurred, the state of Israel would never have been established.  But I say that if the state of Israel would have been established earlier, the Holocaust would not have occured. 

our right to build our sovereign state here, in the land of Israel, arises from one simple fact: this is the homeland of the Jewish people, this is where our identity was forged. 

the simple truth is that the root of the conflict was, and remains, the refusal to recognize the right of the Jewish people to a state of their own, in their historic homeland.   In 1947, when the United Nations proposed the partition plan of a Jewish state and an Arab state, the entire Arab world rejected the resolution. The Jewish community, by contrast, welcomed it by dancing and rejoicing. The Arabs rejected any Jewish state, in any borders. Those who think that the continued enmity toward Israel is a product of our presence in Judea, Samaria and Gaza, is confusing cause and consequence. The attacks against us began in the 1920s, escalated into a comprehensive attack in 1948 with the declaration of Israel’s independence, continued with the fedayeen attacks in the 1950s, and climaxed in 1967, on the eve of the six-day war, in an attempt to tighten a noose around the neck of the State of Israel.  All this occurred during the fifty years before a single Israeli soldier ever set foot in Judea and Samaria .

In my vision of peace, in this small land of ours, two peoples live freely, side-by-side, in amity and mutual respect.  Each will have its own flag, its own national anthem, its own government.  Neither will threaten the security or survival of the other.

This policy must take into account the international situation that has recently developed.  We must recognize this reality and at the same time stand firmly on those principles essential for Israel.

Palestinians must clearly and unambiguously recognize Israel as the state of the Jewish people.  The second principle is: demilitarization. The territory under Palestinian control must be demilitarized with ironclad security provisions for Israel.  Without these two conditions, there is a real danger that an armed Palestinian state would emerge that would become another terrorist base against the Jewish state, such as the one in Gaza. 

In order to achieve peace, we must ensure that Palestinians will not be able to import missiles into their territory, to field an army, to close their airspace to us, or to make pacts with the likes of Hezbollah and Iran.

It is impossible to expect us to agree in advance to the principle of a Palestinian state without assurances that this state will be demilitarized.

Therefore, today we ask our friends in the international community, led by the United States, for what is critical to the security of Israel:  Clear commitments that 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 – real monitoring, and not what occurs in Gaza today.  And obviously, the Palestinians will not be able to forge military pacts.

Without this, sooner or later, these territories will become another Hamastan. And that we cannot accept.

Regarding the remaining important issues that will be discussed as part of the final settlement, my positions are known: Israel needs defensible borders, and Jerusalem must remain the united capital of Israel

The territorial question will be discussed as part of the final peace agreement.  In the meantime, we have no intention of building new settlements or of expropriating additional land for existing settlements. But there is a need to enable the residents to live normal lives, to allow mothers and fathers to raise their children like families elsewhere.  The settlers are neither the enemies of the people nor the enemies of peace.  Rather, they are an integral part of our people, a principled, pioneering and Zionist public.

Unity among us is essential and will help us achieve reconciliation with our neighbors.

If the Palestinians turn toward peace – in fighting terror, in strengthening governance and the rule of law, in educating their children for peace and in stopping incitement against Israel - we will do our part in making every effort to facilitate freedom of movement and access, and to enable them to develop their economy.  All of this will help us advance a peace treaty between us. 

Above all else, the Palestinians must decide between the path of peace and the path of Hamas. The Palestinian Authority will have to establish the rule of law in Gaza and overcome Hamas.  Israel will not sit at the negotiating table with terrorists who seek their destruction.   Hamas will not even allow the Red Cross to visit our kidnapped soldier Gilad Shalit

If we receive this guarantee regarding demilitirization and Israel’s security needs, and if the Palestinians recognize Israel as the State of the Jewish people, then we will be ready in a future peace agreement to reach a solution where a demilitarized Palestinian state exists alongside the Jewish state. 

The Israeli leader offered to talk to the Palestinians immediately and with "no preconditions".

"We want to live with you in peace as good neighbours," he said.

Agreeing the principle of a Palestinian state, he said Israel would "be prepared for a true peace agreement [and] to reach a solution of a demilitarised Palestinian state alongside the Jewish state". But only 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".

the issue of Palestinian refugees who fled or were forced from their homes in what is now Israel in 1948 and 1949. The Palestinians say they and their millions of descendants have the right to return to Israel - which would mean an end to its Jewish majority - but Israel has consistently rebuffed that demand.

Mr Netanyahu stuck to a similar line, saying: "The Palestinian refugee problem must be resolved outside the borders of the state of Israel. "Any demand to resettle refugees within Israel undermines Israel as a state for the Jewish people."

Another key issue the two sides have failed to agree on is the status of Jerusalem. Mr Netanyahu insisted the city must be the "united capital of Israel", although Palestinians want it divided to allow them to locate the capital of a future state there.

Mr Netanyahu also said he was willing to go to Damascus, Riyadh and Beirut in pursuit of a Middle East peace deal.

Nabil Abu Rdainah, a spokesman for Palestinian Authority President Mahmoud Abbas, said the Israeli leader's speech "torpedoes all peace initiatives in the region".

Another Abbas aide, Yasser Abed Rabbo, told the AFP news agency that recognition of Israel's Jewish character was a demand for Palestinians "to become part of the global Zionist movement".

While the militant Hamas movement, which controls the Gaza Strip, said the speech reflected Mr Netanyahu's "racist and extremist ideology".

"The Italian preparations for the summit have been chaotic from start to finish," said Richard Gowan, an analyst at the Centre for International Co-operation at New York University.

The behind-the-scenes grumbling has gone as far as suggestions that Italy could be pushed out of the G8 or any successor group. One possibility being floated in European capitals is that Spain, which has higher per capita national income and gives a greater percentage of GDP in aid, would take Italy's place.

"The G8 is a club, and clubs have membership dues. Italy has not been paying them," said a European official involved in the summit preparations.

Critics say Italy's Berlusconi government has made up for the lack of substance by increasing the size of the guest list. Estimates of the numbers of heads of state coming to L'Aquila range from 39 to 44."This is a gigantic fudge," Gowan said. "The Italians have no ideas and have decided that best thing to do is to spread the agenda extremely thinly to obscure the fact that didn't really have an agenda."

Silvio Berlusconi has come in for harsh criticism for delivering only 3% of development aid promises made four years ago, and for planning cuts of more than 50% in Italy's overseas aid budget.

The heavy criticism of Italy comes at a time when the future of the G8 as a forum for addressing the world's problems is very much in question. At the beginning of the year the G20 group, which included emerging economies, was seen as a possible replacement, but the G20 London summit in April convinced US officials it was too unwieldy a vehicle.

The most likely replacement for the G8 is likely to be between 13- and 16-strong, including rising powers such as China, India, Brazil, Mexico and South Africa, which currently attend meetings as the "outreach five" But any transition would be painful as countries jostle for a seat. Italy's removal is seen in a possibility but Spanish membership in its place is unlikely. The US and the emerging economies believe the existing group is too Euro-centric already, and would prefer consolidated EU representation. That is seen as unlikely. No European state wants to give up their place at the table..

SPIEGEL: Only 13 percent of Germany's stimulus funds are slated for environmental measures. There is little evidence here of the "crisis as opportunity" you repeatedly mention. Gabriel: That puts us in fourth place worldwide, which isn't bad. If you added the money other countries earmark for renewable energy in their national budgets, which goes through the cost of electricity in Germany, we would be even higher up in the ranking, perhaps even at the top.

SPIEGEL: At least that would have deserved the name environmental premium. Gabriel: But, as environment minister, I am very interested in a thriving German automobile industry, because I can only pay for the rising costs of environmental protection at home and abroad if there are people in Germany with jobs and who pay taxes. The increase in expenditures for environmental and climate protection in the federal budget from €875 million ($1.14 billion) under a Green environment minister to €3.4 billion ($4.4 billion) today would not work without the economic success of German industry.

SPIEGEL: And what happens to your own credibility, when you reward people for buying cars by paying a so-called environmental premium that makes no environmental sense? Gabriel: I still call it the scrapping premium, because the main goal is to stabilize auto sales. But the project clearly has an economic impact, because new vehicles emit less CO2 and pollutants per kilometer driven than old ones. SPIEGEL: But the production of new car consumes enormous resources. Gabriel: One could take that argument a step further and say: It would be best for the environment if we stopped buying or producing any new products. That would be the way to save the most energy and CO2. The next thing you'll ask me is why the government didn't give people €2,500 ($3,250) to buy tickets for public transportation.

The environmental industry, with its new technologies, is the biggest market worldwide. We must retain our leading position, because other countries, like the United States, have started to compete with us.

SPIEGEL: US President Barack Obama is depriving the Germans of their leadership role in climate protection?

Gabriel: No, but his economic stimulus programs are good, and he introduced an overdue change of direction in climate policy. But as far as concrete reduction targets are concerned, his current proposals are still not sufficient. America remains well removed from the European targets and the necessary international targets in climate protection. Many in politics are so pleased about the new American administration that they want to be nothing but nice to the United States. But in doing so, we fail to recognize that the American president, no matter who he is, will always strongly champion American interests.

SPIEGEL: Obama has offered to reduce American CO2 emissions to 1990 levels by 2020. Gabriel: But that is still far from enough. International climate scientists believe it is vital that we reduce CO2 emissions by 2020 to a level 25 to 40 percent lower than in 1990. And the developing and emerging nations expect serious efforts on the part of the industrialized nations. The Americans must also show some movement if the December climate summit in Copenhagen is to be a success. Otherwise, many will hide behind the United States. If that happens, our efforts will fall far short of what is needed to stop climate change and its devastating consequences. We must now discuss this openly worldwide.

Iran is not simply a medium-sized regional power that can be ordered around at will. Ironically, America's disastrous war in Iraq has allowed its fierce adversaries in Tehran to benefit from a massive shift of power in the Middle East.

Before his ascent to the office of president, not even diplomats stationed in Tehran and familiar with all of the ins and outs of Iranian politics were familiar with this short man with the sparse beard and piercing eyes. The fiery revolutionary, hardworking to the point of exhaustion and filled with contempt for earthly wealth, rose to power from humble beginnings and became the hope of all "Mostasafin," the disenfranchised millions without whom the Islamic Republic probably would not exist today and for whom Ahmadinejad has fashioned himself into an Iranian Robin Hood.

This places the Americans before the virtually impossible task of joining forces with Iran to resolve the classic Middle East conflict and its 30-year conflict with Tehran itself. For this reason, the Iraq question is also becoming increasingly urgent for Washington.

Obama knows that the United States could derive substantial benefits from cooperation with Tehran. Without Iran, for example, it will be almost impossible to bring peace to Afghanistan in the long term. In Afghanistan and Pakistan -- the center of conflict that Washington describes in its new strategic concept as a single unit known as "AfPak" -- the Americans and Shiite Iran have many interests in common. Tehran's rulers battled the Sunni Taliban radicals, whom they have always seen as dangerous neighbors and ideological foes, before the Americans did.

And Tehran, with the world's second-largest natural gas reserves and its third-largest oil reserves, has the capacity to do a great deal of damage to the international economy -- or help it overcome the global economic crisis.

Conversely, rapprochement with the United States and Europe would also bring enormous benefits to the Iranians. Without know-how from the West, the country will hardly manage to achieve the modernization it needs so urgently. With inflation approaching 30 percent and real unemployment exceeding 20 percent (12 percent, according to official figures), and more than a million drug addicts -- a distressing world record of addiction -- the country faces practically insurmountable problems.

Whether the internally divided Palestinians will manage to come to terms and form a unified government for the Gaza Strip and the West Bank is no longer in the hands of the inconsequential negotiators in Cairo, but will be decided instead by Hamas's patrons in Tehran. Tehran also decides whether the Lebanese Hezbollah or Hamas's extremists use primarily words to express their hostility toward Israel or, as is currently the case, resume their bloody terrorist attacks instead.

Ahmadinejad feels obligated to the permanently downtrodden members of society. As if he were one of them, he campaigned for president four years ago in Tehran's massive poor neighborhoods, traveled to the country's most remote places and promised the underprivileged their share of Iran's riches. He told them that he would fill their empty plates with the proceeds from the sale of oil, and that he would declare war on corruption and nepotism. The "era of oppression, hegemonic regimes, tyranny and injustice has reached its end," Ahmadinejad told supporters after his election.

But the political achievements of President Ahmadinejad have been more miserable than stellar. In addition to isolating his country even further in the world, he has ruined its economy with his chaotic economic policies. In the devastating assessment of Ali Larijani, the president of the Iranian parliament and Ahmadinejad's biggest domestic rival, whom he previously removed from his position as Iran's chief nuclear negotiator with the West: "The confusion is the result of the government arbitrarily dissolving offices and dismissing experts, ignoring parliamentary resolutions and stubbornly going its own way."

Nevertheless, it is quite possible that this man, who has probably done more damage to his country than any other president in the 30-year history of the Islamic Republic, will enter a second term this summer -- simply because he lacks a convincing and courageous opponent.

Moussavi is of a significantly more robust nature than Khatami. As prime minister during the years of the Iraq war, he successfully managed the country's wartime economy. Critics note, however, that Moussavi's tenure was marked by a sharp rise in arrests and repression. He has not held any public office in 20 years and is virtually unknown among younger Iranians, who make up about 60 percent of the population.

On the surface, the elegant Moussavi would undoubtedly represent Iran more effectively on the international stage than Ahmadinejad. He appears to be more open to negotiations with the Americans. And yet, when it comes to the central nuclear conflict, the new candidate is just as obstinate as the current president. At a press conference in Tehran just last Monday, he noted that he too would not back down on the issue.

Which candidate the powerful religious leader Khamenei ends up supporting will likely be the decisive question. When Ahmadinejad came into office, he kissed Khamenei's hand. The two men were long considered extremely close ideologically, although since then Khamenei has more or less openly criticized Ahmadinejad's economic policies. Only recently, however, the religious leader spoke so positively about the president that many interpreted his words as an endorsement of his candidacy. Many observers of Iranian politics believe Ahmadinejad, because of his lasting popularity in rural areas, will be elected to a second term.

There are no questions that the Iranian president does not answer with questions of his own. He insists, most of all, on a few core concepts. One of them is justice, but he defines what justice is. Another is respect. He claims that he and his country are not afforded sufficient respect. This desire for recognition seems almost insatiable.

In Ahmadinejad's view, "hagh chordan," or the act of trampling on the rights of the Iranians, is a pattern that constantly repeats itself and comes from all sides, leading to a potentially dangerous mix of a superiority and an inferiority complex -- but not the irrationality of which the president is so often accused, especially by the Israelis.

A source in Prime Minister Benjamin Netanyahu's party confirmed Wednesday that his new government intended to distance itself from U.S.-sponsored understandings on working towards a Palestinian state.

Asked about ultra-nationalist Lieberman's remark that Israel was no longer bound by the 2007 framework, the source replied: "There is no problem here. He [Lieberman] is distancing himself from the Annapolis label, as the government intends to do."

Hadash MK Afu Aghbaria, meanwhile, urged the international community to impose a diplomatic embargo on Israel in the wake of Lieberman;s statements. "It isn't surprising that a racist foreign minister would produce such vehement suggestions, only a day after the new government was formed," Aghbaria said.

Palestinian President Mahmoud Abbas responded to the swearing-in of Benjamin Netanyahu's government by saying: "We want to tell the world that this man doesn't believe in peace and therefore we cannot deal with him... the world should put pressure on him."

More than 1,400 Palestinians were killed, including more than 900 civilians, according to the Palestinian Center for Human Rights, which published a list of names of the dead. Israel has said the toll was lower, and the "vast majority" of the dead were militants. But it did not publish a list to support the assertion.

In a joint statement, nine Israeli rights groups said the decision to close the investigation without bringing charges "only strengthens the need for the attorney general to allow for an independent nonpartisan investigative body to be established in order to look into all Israeli army activity" in Gaza.Defense minister, Ehud Barak, said the investigation showed that Israel possesses "the most moral army in the world".