JERUSALEM: Outgoing Israeli Prime Minister Ehud Olmert said yesterday Israel must give up most of the Palestinian territories it has occupied since 1967, including East Jerusalem, if it wants peace.

“If we are determined to preserve the Jewish and democratic character of the state of Israel, we must inevitably relinquish, with great pain, parts of our homeland, and we must relinquish Arab neighborhoods in Jerusalem,” said Olmert.

“Waiting unnecessarily to make a decision will change the delicate balance in the international community which currently adheres to the notion of two states for two people with defined, agreed-upon, internationally recognized borders,” he said. Olmert spoke at a ceremony marking the 13th anniversary of the assassination of prime minister Yitzhak Rabin by a Jewish extremist opposed to any territorial concessions to the Palestinians.

Meanwhile, in another and unrelated development, Israeli opposition leader Benjamin Netanyahu says that if he wins coming elections, he will continue political peace talks with the Palestinians.

Polls currently place Netanyahu’s conservative Likud party and Foreign Minister Tzipi Livni’s centrist Kadima neck and neck ahead of February elections.

Netanyahu’s office has said peace talks launched last year by US President George W. Bush have failed to make headway, and in the past he has signaled he would cut off the negotiations if elected.

But after meeting with international peace envoy Tony Blair in Jerusalem yesterday, Netanyahu said he would move political negotiations forward if he wins.