Israeli Prime Minister Benjamin Netanyahu delivers a speech at Bar Ilan University near Tel Aviv, June 14, 2009. Netanyahu Sunday night called on the Palestinians to resume Middle East peace talks without preconditions and presented three conditions for the establishment of a Palestinian state alongside Israel. [Pool-Baz Ratner/Xinhua]

Netanyahu, who until now had not endorsed US President Barack Obama's goal of Palestinian statehood, used Sunday's policy speech as an opportunity to reverse course and narrow a rare rift between Israel and its closest ally, said local daily Ha'aretz.

Palestinian President Mahmoud Abbas has said peace talks with Israel can not resume until Netanyahu halts settlement and accepts the two-state solution.

During the speech, Netanyahu vowed that Israel would not build any new settlements and would refrain from expanding existing Israeli communities in the West Bank.

However, he said the Israeli government must be allowed to accommodate "natural growth" in these settlements.

Netanyahu also said that Jerusalem must remain the "unified capital of Israel".

Meanwhile, the Israeli prime minister called on the Palestinians to resume Middle East peace talks without preconditions.

"I call on you, our Palestinian neighbors, and to the leadership of the Palestinian Authority (PA): Let us begin peace negotiations immediately, without preconditions," he said, reiterating that Israel has no desire to control the Palestinian people and declaring that both nations should live side by side in peace.

Netanyahu said the leadership of PA must defeat Hamas Islamists who reject interim peace accords.

"They must decide between the way of peace and the way of Hamas," he said, "the PA must impose law and order... and overcome Hamas. Israel will not negotiate with terrorists trying to destroy it."

Israel is committed to international agreements and expects all the other parties to fulfill their obligations as well, said Netanyahu, adding that he was prepared to meet with the leaders of neighboring Arab countries at any time to promote regional peace and to gain their contribution to the Palestinian economy.

"I turn to Arab leaders: Let's make peace, I am ready," said the Israeli prime minister, "I am willing to go to Damascus, Riyadh, Beirut -- to meet anytime and anywhere."

In his speech, Netanyahu also warned of the threat emanating from Iran, saying that "the biggest threat to Israel, the Middle East and all humanity is the meeting between radical Islamism and nuclear weaponry."

(Xinhua News Agency June 15, 2009)