Since he entered the White House, President Barack Obama has been trying to convince Binyamin Netanyahu to accept the inevitable need for a Palestinian state. During his speech on Sunday, Netanyahu finally acknowledged this need. Highlighted by a strong patriotic fervor, Netanyahu's speech contained several concrete preconditions regarding negotiations with the Palestinian leadership. While some of the preconditions were impractical, other issues he outlined where sensible. Regardless, we should applaud Netanyahu's big step in accepting a Palestinian state, which runs contrary to his longstanding opinion on the issue. In dissecting the prime minister's speech, several issues rise to the surface. First, there is a contradiction between Netanyahu displaying a willingness to negotiate without preliminary conditions and his intransigence on Jerusalem and the refugees. Moreover, previous agreements oblige him to at least negotiate these issues. He should state his opinions on these matters during the negotiations, not before. The second issue is time. It took Netanyahu a few decades to alter his political stance for the good of Israel and the Middle East. He must work to expedite the peace process and execute a lasting agreement with the Palestinians, in order to reach regional peace during the Obama era. Netanyahu in his speech also demanded the Palestinian leadership's official acknowledgment of Israel as a Jewish state. This demand is unnecessary. Our Judaism in Zion is firmly rooted in a long history of more than 3,000 years, Netanyahu referred to this himself. Some lukewarm statement from Mahmoud Abbas cannot change that history or our identity. Additionally, Israel never demanded such formal recognition of its Jewish nature from Jordan or Egypt during negotiations with those countries. In moving forward with the negotiation process, Netanyahu should heed the following advice. He should be flexible with respect to the permanent borderline between Israel and a Palestinian state based on the 1967 Green Line, including some of the Israeli settlements in the State of Israel. East Jerusalem also demands flexibility. As absorbing 250,000 Palestinians would be contrary to the nature of a Jewish state, the Arab settlements in East Jerusalem should become part of a Palestinian state. Regarding Jerusalem itself and the holy sites, a reasonable solution must stem from former president Bill Clinton's proposal, whereby Jerusalem will become a unified city; however, as an addendum, the Jewish neighborhoods and Jewish holy sites should remain under Israeli sovereignty. In terms of the right of return for Palestinian refugees, Netanyahu is correct in refusing to accept such a compromise. However, he cannot completely avoid discussion on this issue because he is bound by previous Israeli agreements, like Oslo, that call for future talks on this matter. Any flexibility on this issue should be only symbolic, however, because Palestinian refugees will soon have a new home in Palestine in which to rebuild their lives. Any sort of compensatory damages to the refugees will be discussed during negotiations. With regard to security issues, most of the prime minister's demands were commendable. Security cooperation with the Palestinian leadership, however, is unavoidable. Such cooperation would strengthen the defense against terrorism and improve coordination in the passageways. Netanyahu should initiate intensive negotiations rather than be dragged into an agreement by the Americans. Any alternative to an agreement on security would lead to a dangerous deterioration in the whole region. Among the people who congratulated Netanyahu on his speech was Obama himself, which alone is an encouraging sign for Israel. To a great extent, the ball is now in the American president's court, and he is very determined to reach a two-state solution as well as regional peace. Soon, we should expect Obama to reveal a peace plan at a conference that will initiate the negotiations. Netanyahu and his administration should be prepared. Tzipi Livni also congratulated the prime minister on his speech, and if he chooses a realistic approach to peace, it will be appropriate for Livni and the Kadima Party to join the government. Netanyahu has a unique opportunity to shed American pressure and grab the reins from Obama and continue forging a path to a strategic peace process with the Palestinians and the region. Uri Savir was the chief negotiator of the Oslo Accords and is currently president of the Peres Center for Peace.