Israel should accept the principle of the right of return for Palestinian refugees and then negotiate the terms of its implementation, a senior Arab diplomat has told The Jerusalem Post. He spoke with the paper on condition of anonymity in advance of a renewed effort by the Arab League to revive its 2002 initiative to end the Palestinian-Israeli conflict at the upcoming summit on March 28 and 29 in Riyadh. Arab League Secretary-General Amr Moussa has rejected calls from Israel to change the section of the plan dealing with Palestinian refugees. But in speaking with the Post late last week, the diplomat struck a more conciliatory tone. He urged Israelis to talk with the Palestinians and the larger Arab world on the broad basis of the principles set out in the 2002 plan, with the understanding that the terms of a permanent solution could come about only through negotiations. The diplomat said that in spite of the large numbers of refugees under discussion he didn't believe that recognizing the Palestinian refugees' right of return endangered Israel's Jewish identity. "No one is saying that that all the refugees will go back," said the diplomat. The exact details are less important at this stage since Israel and the Palestinians would have to agree to terms under which the right of return would be implemented as part of a permanent solution, he said. Such talks would determine issues such as the exact numbers of who would return. Some would obviously return, he said, but others could receive compensation instead. To settle the conflict, he warned, Israel must at least "recognize that right [of return] and to give them [the Palestinians] the right of choice. "It's important for Israel and the international community to show the Palestinians that there is a grievance. "You cannot just tell them from the beginning that you have no rights," said the diplomat. The plan "is a framework of a settlement. The final outcome is in the negotiations," the diplomat said. "We understand the Israelis might not agree to everything [the Arab League wants] and the Arabs might not agree to everything [the Israelis want]," said the diplomat. "To have a lasting peace, you cannot impose anything on one party." According to the Arab League's 2002 initiative, relations with Israel would be normalized in exchange for Israel's complete withdrawal to the pre-1967 lines, including in Jerusalem and on the Golan Heights. The plan also called for a just solution to the Palestinian refugee problem to be agreed upon in accordance with UN Resolution 194, which states that the refugees should be allowed to return to their homes in Israel or be compensated. Israel to date has balked at talks based on this plan because of the right of return language and has instead shown a preference for an earlier version first proposed by Saudi Arabia. Prime Minister Ehud Olmert signaled on Sunday before the cabinet meeting that if the Arab League, in its March meeting, reverts to the Saudi initiative, there is something to talk about. "We have said more than once that the Saudi initiative is a matter which we would be ready to treat seriously and we have not altered our position," he said. "We hope very much that at the meeting of heads of Arab states to take place in Riyadh, the positive elements expressed in the Saudi initiative will be revalidated and will perhaps improve the chances of negotiation between us and the Palestinian Authority," he said in a clear signal to the Arab world. Officials in the Prime Minister's Office made a point of clarifying after this statement that Olmert was referring to the Saudi initiative of February 17, 2002, as written up in a brief column by Thomas Friedman in The New York Times after a conversation with then Saudi Crown Prince, and now King, Abdullah, which did not reference UN Resolution 194. Sunday was not the first time Olmert has said there were positive elements in the Saudi initiative, having made similar comments during a press conference last month with foreign journalists. Foreign Minister Tzipi Livni made clear some 10 days ago that while she too had favored talks based on the Saudi plan, she said Israel could not accept the Arab League initiative if it included the right-of-return clause. Israel's position on the refugees is that the Palestinian claim of return, which extends to at least four million people, would demographically undermine Israel as a Jewish state, given that it has 5.6 million Jewish citizens. Former Knesset Foreign Affairs and Defense Committee chairman Likud MK Yuval Steinitz said he rejected the Arab diplomat's argument. The problem is not the numbers but the principle of the matter, said Steinitz. When the Palestinians or the Arab League speak of the right of return to Israel they are rejecting the two-state solution. The essence of that concept is that the Jews lose their right to areas of the West Bank and the Palestinians in turn lose their right to live in Israel. Palestinians have to accept that part of this land is now dedicated for the Jewish state and Israel has to accept that part of it is set aside for the Palestinians. "That's the essence of the vision," Steinitz said. A two-state solution means that the area is divided into two parts, one for Israel and one for the Palestinians. Why have a Palestinian homeland if you are going to send your people to the Jewish state, asked Steinitz, who opposes talks on the basis of both plans. But chief Palestinian negotiator Saeb Erekat told The Jerusalem Post the focus when evaluating the Arab League plan should be on the phrase "a just and agreed-upon solution." What is important is that the issue of Palestinian refugees would be resolved to the satisfaction of both parties, he said. So why does it matter whether it is the Saudi text or the Arab League text which is used as the starting point for negotiations, Erekat asked. He added that the Saudis would play a key role in such talks. Both Erekat and the Arab diplomat added that the plan had credibility within the context of the two-state solution, because the Arab League plan and the Saudi initiative were both mentioned in the road map, which had the backing of the international community and the Palestinians. Israel in turn accepted the road map in 2003, but it clarified at the time that it did so only on condition that the right of return was rejected. Still, in spite of Israel's rejection, the diplomat said, he believed there was a "glimmer of hope" that Israel would move forward under the auspices of the plan, which has gained momentum in the Arab world. It is based on reciprocity and the principle of land for peace, he said. "The Israelis cannot have land and peace together. They have to give up land." The Arabs in turn cannot have the land without ensuring security for Israel, said the diplomat. The time is right for both sides to break the deadlock and move forward, he said. He added that he believed that solving the Israeli-Palestinian issue would help stabilize the region. There are many issues that contribute to the volatility of the region, he said, as he listed problems such as Iran, Iraq, the Israeli-Palestinian conflict and the radicalization of the Middle East. But he said he believed that solving the longest-standing issue would change the atmosphere. It would strengthen and give hope to the moderate forces and undermine those who want to radicalize the region. While he was clear on the principles of the matter, he was more vague on how the actual process of negotiations would work. But he said the Palestinians would be represented by their chairman, Mahmoud Abbas. He added that he envisioned a multilateral dialogue, or even an international conference under the auspices of the Quartet, that would include the Arab League, the Israelis and the Palestinians.