Prime Minister Ehud Olmert, in a surprise gesture intended to strengthen Palestinian Authority Chairman Mahmoud Abbas, announced at Monday's summit here the unilateral release of 250 Fatah prisoners. "As a gesture of goodwill to the Palestinians, and amid an understanding of the importance of the issue of the prisoners, I decided today that I'll bring to the Israeli government at its next meeting a recommendation to release 250 prisoners from Fatah, without blood on their hands, as long as they sign commitments not to again become involved in terrorism," Olmert told the gathering at the Red Sea resort. Olmert and his aides have said for days that there was no intention at this time to discuss a prisoner release.
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Olmert's statement came after he met separately with the other leaders at the summit: Abbas, Egyptian President Hosni Mubarak, and Jordanian King Abdullah II.
Olmert said plainly that he was taking this step "because it is important that every Palestinian know that those who are willing to establish peaceful relations and conciliation with us will get from us a conciliatory hand extended in return."
Olmert's announcement contrasted starkly with Hamas's release Monday of the audiotape of Cpl. Gilad Schalit apparently reading a scripted message saying that he was in deteriorating health and calling on the government to meet Palestinian demands for a large-scale prisoner swap.
Olmert said the release of that tape was yet another example of the terrorist organization's "cruelty and inhumanity." He said they were trying to manipulate and extort the family and the Israeli public. "It will not work," he declared.
In addition to the release of the prisoners, Olmert said he told Abbas that Israel would release frozen PA tax revenue held by Israel, renew security and economic cooperation, "significantly improve" freedom of movement in the West Bank and renew and widen commerce between Israel and the West Bank.
"The residents of Judea and Samaria," Olmert said, referring to West Bank Palestinians, "will feel that choosing a path that is not violence and terrorism, a path of dialogue and peace, opens new diplomatic opportunities, and leads to a better, more comfortable, more peaceful life."
Olmert also said that he acceded to Abbas's request to continue to supply Gaza with electricity, water, medical services, food and drugs. "We have no interest in punishing that population only because it is ruled by a terrorist organization and extremist elements interested in destruction," he said.
Olmert, who spoke after Mubarak and Abdullah, but before Abbas, also made a direct appeal to other Arab states for direct involvement and support in the diplomatic process.
"The Arab peace initiative is important to us," Olmert said. "We cannot ignore genuine calls for full normalization of ties with Israel. Let's talk about it. This is the time for you to get on the peace cart, and not sit on the sidelines, and say, 'later.' There is no reason to wait. Give our people, the Israelis and the Palestinians, support, backing and assistance. They need it."
Olmert, clearly appealing to countries like Saudi Arabia and the Gulf States but careful not to mention any names, urged their leaders to exhibit leadership and not be concerned about negative public opinion.
"What we have in common is wider than it may appear, our common enemies are many - extremism, terrorism, poverty, ignorance, disease. If we fight together against this we can defeat them and ensure for ourselves a better life. We need to prevent the extremism from dictating the agenda. The moderate voice, logical and seeking peace, must be heard precisely today," he said.
Olmert turned directly to the Palestinians, as his predecessor Ariel Sharon often did at occasions such as these, and reiterated that Israel had no desire to control their fate forever.
"I want to take advantage of this opportunity to turn to the Palestinian people and say: I am aware of the difficult period you are going through. The difficult days, the hardships, the pain and the challenges before your leadership," Olmert said.
"Our nations know very well suffering and pain, and the confrontations and the wars between us. In Israel there are many families who have lost their loved ones, and I know personally many of them. The pictures are difficult, the stories break the heart, the pain is tremendous, almost unending. On the Palestinian side many people have lost their loved ones, their property and their homes and were turned into refugees. Also for them the suffering is deep, the pain and the memories are never ending."
Olmert said that Israel was not "apathetic" to Palestinian suffering, and was not "ignoring the need to bring it to an end, through mutual understanding and compromise."
He said Israel had "no desire to control you, no pretension to run your lives. We have no intention to decide for you. I believe that the day is coming close when you will be able to live in your own state alongside Israel."
Abbas, whose speech was shorter and less emotional than Olmert's, and did not include a direct appeal to the Israeli public, said the region was at a crossroads and had to choose between the way of dialogue and peace or anarchy and extremism.
"The key is in our hands," he said. "I turn to my partner, Prime Minister Olmert, to begin diplomatic negotiations, with an agreed timetable, to establish a Palestinian state, with Jerusalem as its capital that will live in peace and security alongside Israel and assume responsible for its people."
He said that this would fulfill the desires of the vast majority of the Palestinian people - to live in peace and put an end to the Israeli-Arab conflict.
Abbas reiterated that the PLO recognized Israel in the 1993 Oslo accords, and called on Olmert "not to miss this historic opportunity so we can live as neighbors in two states inside the 1967 borders." He said the roots of terrorism needed to be uprooted and "a culture of peace" established.
Mubarak, meanwhile, said that peace could be attained "if brave steps would be taken." He also called for negotiations between Fatah and Hamas to end their conflict.
Abdullah said that the recent events in Gaza should serve as a "red light," and called for a two-state solution. He said that in order to improve the immediate atmosphere in the area, there was a need for Israel to release the Palestinian tax revenue and lift the restrictions on movement in the West Bank.
AP contributed to this report.