Israeli Prime Minister Benjamin Netanyahu said for the first time Sunday
that Israel would be prepared to live side by side with a Palestinian state,
but only if world powers guaranteed that it would be “demilitarized.” The
proposal came in a major statement of his views on the Israeli-Palestinian
conflict that attracted attention worldwide.

“We take the security of Israel very seriously, but we need a solution that
works, and this would be very difficult for the Palestinians to swallow,”
said an official, who declined to be identified because of the sensitivity
of the diplomacy. American officials “are a long way away from the point
where we’d be talking about this kind of arrangement.”

He noted that Netanyahu provided no specifics about what would be a complex
task. Netanyahu has said previously that Israel could not agree to the
creation of a Palestinian state that possessed a military, had full control
of its borders or wielded authority over electronic communications.

Despite the criticism, U.S. officials were generally positive about the
speech, suggesting that it represented another step toward the high-level
negotiations they want to see begin soon between Israelis and Palestinians.

They hailed Netanyahu’s acceptance of the idea of a separate Palestinian
state, despite the conditions. U.S. officials were willing to overlook the
fact that Netanyahu did not agree to the Obama administration’s insistence
on a complete halt in the growth of Israeli settlements in Palestinian

Palestinian officials bristled at Netanyahu’s speech, but U.S. officials
portrayed the speech as simply laying out the Israeli opening position in
what was likely to be a protracted discussion.

“It’s going to be a complicated negotiation,” said Ian Kelly, the State
Department spokesman.

Netanyahu said in his speech that the Palestinians would need to recognize
Israel as a “Jewish state,” a comment that was widely taken to mean there
would be no right of return for Palestinian refugees.

But Kelly said U.S. officials took the view that it meant only that “the
Palestinians need to recognize the right of Israel to exist.”