Prime Minister Binyamin Netanyahu, as well as senior officials in his office and in the Foreign Ministry, expressed satisfaction on Monday that his speech the night before had succeeded in throwing the diplomatic ball squarely back into the US, EU and Palestinian court. "The American response [to the speech] was positive," Netanyahu told the Likud Party faction. "I would be misleading you to say that the way has been cleared, but our situation is better today than before." Diplomatic sources pointed with approval to the response to the speech issued by US President Barack Obama, who said the prime minister's address at Bar-Ilan University was an "important step forward." Obama made no mention in his response to the fact that Netanyahu made clear that he had no intention of freezing all settlement construction. One government source said there was a "positive feeling" in the Prime Minister's Office that the speech was well received in the West, even if it was panned in the Arab world, and that Netanyahu succeeded in "putting a number of diplomatic balls in the air, and taking the diplomatic initiative." According to this source, people will now be asking the Palestinians why they are not willing to return immediately to the negotiating table with Israel and why they won't recognize Israel as the homeland of the Jewish people. In Europe, too, according to government officials, the reaction to the speech was tepid to warm, but apparently enough for the EU foreign ministers to issue a statement following a discussion about the speech and the Middle East peace process that did not significantly differ from those put out by this body when Ehud Olmert was prime minister. Netanyahu held post-speech telephone conversations with British Prime Minister Gordon Brown, German Chancellor Angela Merkel and US Mideast envoy George Mitchell on Monday night. The Prime Minister's Office said the three called the Bar-Ilan address an important step in the peace process. Merkel spoke at length with Netanyahu in a telephone call in which she invited him to visit Germany in the near future. Merkel welcomed Netanyahu's policy speech as a "first, important step in the right direction toward realizing a two-state solution," her office said, and expressed hope that Israelis and Palestinians would return to negotiations in an effort to "resolve the remaining questions." Brown's office said the British prime minister had stressed to Netanyahu that Israel must completely stop all construction in settlements so that the peace process can move forward. In addition, Czech Foreign Minister Jan Kohout, whose country holds the rotating EU presidency, said after the EU foreign ministers met in Luxembourg with Foreign Minister Avigdor Lieberman as part of the annual EU-Israel Association meeting that the EU's decision from December 2008 to upgrade ties with Israel, a decision put on ice because of Operation Cast Lead, still stood. There was concern in Jerusalem that the EU, as a result of the formation of the Netanyahu government, would scrap the idea of upgrading ties with Israel until it proved its commitment to a diplomatic process. Referring to the Netanyahu speech, Kohout said that "in my view it is a step in the right direction. "Of course," he added, "there are a number of other elements which need to be analyzed, but the acceptance of the Palestinian state is there." Carl Bildt, the foreign minister of Sweden, which will take over the EU presidency on July 1, was more guarded, saying "the fact that he [Netanyahu] uttered the word state is a small step forward," adding that "whether what he mentioned can be defined as a state is a subject of some debate." Prior to the prime minister's speech, there was concern in Jerusalem that the EU would issue a very critical statement of Israel after its meeting on the Middle East peace process. Indeed, there had been discussion in the EU in recent days of a Belgian proposal that would have had the EU introduce a clause into its resolutions saying that east Jerusalem should be the capital of a future Palestinian state, something that Jerusalem lobbied hard against, and which it perceived as a sign of a possible change of temperament toward Israel inside the EU. Likewise, officials in Jerusalem said there were a growing number of voices inside the EU interested in "watering down" the Quartet's three conditions for dealing with Hamas, to make dialogue with that organization possible. None of that was reflected in the statement issued on Monday night in Luxembourg, and part of the credit for that - according to diplomatic officials - had to do with the prime minister's words at Bar-Ilan. "Before the speech Netanyahu had no credit with the Europeans, and in fact was in deficit," a senior diplomatic official said. "Now he has some credit. Not a lot, but some credit." The EU foreign ministers issued a statement on the peace process that reiterated its commitment to a two-state solution, welcomed the US administration's commitment to vigorously pursue a two-state solution and a comprehensive peace, called on Israel to commit unequivocally to a two-state solution, and welcomed "the initial step" announced by Netanyahu of "a commitment to peace that would include a Palestinian state." The foreign ministers called on both parties to take immediate steps to resume the peace negotiations. Netanyahu, for his part, said on NBC's Today Show on Monday that he was willing to meet immediately with all Arab leaders, including the Palestinian leadership, which has so far conditioned a resumption of negotiations with Israel's on its acceptance of a Palestinian state and an end to all settlement construction. Explaining his rationale for demanding that the Palestinians recognize Israel as a Jewish state, Netanyahu said, "Just as they expect us to recognize a Palestinian state, they have to recognize a Jewish state. And, of course, a Palestinian state cannot threaten the Jewish state. That's why I said it should be demilitarized." He said that the settlement construction issue was one that he has discussed with Mitchell, whom he will meet again next week in Paris. "I think that I made it also clear that I would not build new settlements and that I would not expropriate land for additional building in existing settlements," Netanyahu said. "And I think President Obama and I are trying to reach a common understanding of this. And I hope, with goodwill - and certainly we have goodwill, and I'm sure the president has that too - I think we'll find such common ground."