Prime Minister-designate Binyamin Netanyahu refused the demands of two coalition partners to insert a clause against a Palestinian state in the coalition agreement, sources close to Netanyahu told The Jerusalem Post on Saturday night.
They added that there is no great substantive gap between Netanyahu and the international community regarding the issue.
According to the sources, while Netanyahu has not yet uttered the phrase "two states for two peoples," he has made it clear that he doesn't want to govern a single Palestinian, though he doesn't want them to have powers that could threaten Israel.
The sources said that Netanyahu would make his views clear to US and European leaders. They added that it would be possible to find a formulation on the nature of a Palestinian state that everyone could live with, though Netanyahu would not agree to a state that would be able to threaten Israel's security.
Netanyahu, in a Washington Post interview earlier in the month just after getting the nod from President Shimon Peres to form a coalition, said, "Substantively, I think there is broad agreement inside Israel and outside that the Palestinians should have the ability to govern their lives, but not to threaten ours."
In recent weeks Netanyahu has been telling international leaders that the Palestinians should have all the powers to govern themselves, but not the handful of powers that could endanger Israel's security, such as an army, the right to make defensive treaties, or full control over its air space, water supply or electromagnetic spectrum.
The sources' comments came as the EU, for the second time in two weeks, sent a strong warning to Netanyahu that EU ties with Israel could take a turn for the worse if he rejected a two-state solution.
Czech Foreign Minister Karel Schwarzenberg, whose country currently holds the EU presidency, said Friday that if the new Israeli government does not commit itself to establishing a Palestinian state, "relations would become very difficult indeed."
"At one of our next ministerial meetings we would have to discuss what consequences the EU would draw from that," he added, after chairing the opening day of a two-day EU foreign ministers meeting.
"Both parties must stick to their commitments from the past: A two-state solution and all agreements reached over the past few years," Schwarzenberg said.
Earlier this month, EU foreign policy chief Javier Solana warned that the bloc may reevaluate its ties with Israel if the incoming government isn't committed to a two-state solution.
"Let me say very clearly that the way the European Union will relate to an [Israeli] government that is not committed to a two-state solution will be very, very different," Solana said.
Both US President Barack Obama and Secretary of State Hillary Clinton have made clear in recent weeks that a two-state solution was a cornerstone of their Israeli-Palestinian policy, although - unlike the EU - they did not threaten any overall reassessment of relations with Israel if the Netanyahu government does not fall into line.
Meanwhile, chief Palestinian negotiator Saeb Erekat wrote, in an op-ed that appeared in Saturday's Washington Post, that "Israel's own commitment to peace is in doubt after the formation of a right-wing coalition government.
"Peace is not a word that sits comfortably with the Israeli right, which will dominate Israel's new government, even with Labor's decision this week to join it," he wrote. "Among its ranks are those who have long opposed peace with Palestinians, no matter the cost; who use the cover of religion to advocate extremist views; and who have supported the expulsion of Palestinians or now devise loyalty tests designed to achieve the same result."
Erekat wrote that "rather than ending the occupation, Netanyahu has proposed an 'economic peace' that would seek to normalize and better manage it. Instead of a viable Palestinian state, his vision extends no further than a series of disconnected cantons with limited self-rule.
"Palestinians have not engaged in years of negotiations to see them fail," Erekat wrote. "But neither is our patience unlimited."
Sources close to Netanyahu said in response that the burden of proof in the peace process remained with the Palestinians, and that the Palestinian leadership must show that they were not only able to mouth words in English, but also educate their public toward making the ideological compromises that would be needed for any agreement.
That this has not happened, the sources said, was evidenced by the fact that the Palestinians were not able to accept the huge concessions - including unprecedented concessions in Jerusalem - that Prime Minister Ehud Olmert said last week that he had offered.
The sources, who pointed out that the words "terrorism" or "Kassam rockets" did not appear once in Erekat's piece, said that Netanyahu would surprise his skeptics because he had a realistic assessment of what could and could not be achieved at this time.
