Palestinian recognition of Israel as a Jewish state is the only way to end the conflict, the Foreign Ministry said Monday, in response to Palestinian Authority President Mahmoud Abbas' rejection of the Israeli demand for such recognition. "The argument over recognizing Israel as a Jewish state is not technical or tactical," Foreign Ministry spokesman Yossi Levy told The Jerusalem Post Monday. "The Palestinians cannot negotiate for a two-state solution where one is Palestinian and the other is Palestinian-to-be," he said. "This is essential; it is the choice between ending the conflict or failing to end the conflict." A ministry statement said that "recognizing Israel as the sovereign state of the Jewish people is a crucial and necessary stage in the historical reconciliation process between Israelis and the Palestinians. The sooner the Palestinians internalize this basic fact, the sooner the peace between our nations will progress." Earlier Monday, Abbas delivered a tough speech on peace-making, rejecting Prime Minister Binyamin Netanyahu's demand that the PA recognize Israel as a Jewish state. Last week senior Palestinian officials also rejected Netanyahu's demand. "The Israeli government has come up with many new issues and it does not want a two-state solution," Abbas told the Palestinian "Youth Parliament in Ramallah. "We don't accept the term 'Jewish state' and insist on achieving all our rights." He added: "We say that Israel is a state and the Israelis have the right to call themselves whatever they wish. But I don't accept this. At the Annapolis peace conference we told the Israelis that we only recognize the State of Israel and that they are free to call themselves as they wish." Abbas also expressed his desire to resume peace talks with Israel on the basis of the Saudi peace initiative of 2002, the two-state solution and the "road map" for peace in the Middle East. "The [Saudi] peace initiative is no longer an Arab initiative," he said. "It has become part of the road map, which has been endorsed by the Quartet, and as such it's an internationally recognized peace plan. We don't want to impose an Arab-Islamic peace vision on the Israelis, but this is an international plan." He said that the Palestinians conducted peace talks with the previous government in Israel for a year following the Annapolis peace conference in November 2007. "All the final-status issues were then on the table," he added. "We fulfilled our duties while Israel didn't do anything." He said that during the talks, the Palestinians made clear their position regarding all the final-status issues. "Can anyone deny that Jerusalem was occupied in 1967?" he asked. "And can anyone deny that all the [Palestinian] refugees left their homes in what is Israel today? "We want to tell the Israelis that east Jerusalem doesn't belong to you because it's an occupied territory. Therefore, you have no right to build in the city. They are also stealing our water and selling it to us. We want to solve the problem of water in accordance with international law." Abbas's comments contrast with former prime minister Ehud Olmert's insistence in March that during talks with the Palestinians, he had "put on the table an offer that dealt with the heart of the problems and all our historic emotional heritage of thousands of years. "I said to [Abbas], Here you go, just sign. That was six months ago; I haven't heard back yet," Olmert said. Abbas pledged that if and when he reached an agreement with Israel, he would seek the approval of the Palestinians through a referendum. Abbas's remarks came as Fatah and Hamas negotiators resumed "reconciliation" talks in Cairo with the hope of reaching agreement over the formation of a joint government. Referring to those talks, Abbas reiterated his demand that any new Palestinian government accept all previous agreements that were signed between the Palestinians and Israelis. He also expressed hope that Hamas would recognize the PLO as the "sole and legitimate" representative of the Palestinians - a demand that Hamas has repeatedly rejected in the past. Abbas said that he was prepared to call new presidential and legislative elections in the West Bank and Gaza Strip once Hamas and Fatah reached agreement on the formation of a unity government that would also be responsible for the reconstruction of the Gaza Strip. The PA president dismissed allegations that his security forces were launching a massive arrest campaign against Hamas supporters in the West Bank. "When we arrest someone for security reasons, we are accused of being against the resistance," he complained. "But when Hamas threatens to break the arms and legs of anyone who fires a rocket at Israel from the Gaza Strip, that's OK?" Abbas's criticism of Hamas drew angry reactions from representatives of the Islamic movement, who accused him of trying to scuttle the Egyptian-sponsored "reconciliation" talks in Cairo. Hamas spokesman Fawzi Barhoum said that Abbas was trying once again to "market" US and Israeli plans in the region by insisting that any new government accept the agreements with Israel. "One the one hand, Abbas is telling us that his talks with the Israelis have failed," he noted. "On the other hand, he's continuing to talk about the need to accept and honor the agreements with the Zionist enemy." Barhoum accused Abbas's security forces of serving as a police force to protect Israel's interests in the West Bank. "Abbas is misleading public opinion when he talks about the security measures his forces have taken," he said. "He's trying to cover up for the crimes that his security forces are committing to eliminate Hamas."