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Prime Minister Ehud Olmert agreed to withdraw from all of the Golan Heights during indirect peace talks with Damascus, Syrian President Bashar Assad told the Italian newspaper La Repubblica.

In an interview which appeared in the newspaper's Wednesday edition, Assad said Israel and Syria were within "touching distance" of clinching a peace agreement.

The Syrian premier told La Repubblica that during the Turkish-mediated peace negotiations, Olmert indicated to Turkey's prime minister, Reccep Tayip Erdogan, that he is ready to relinquish all of the Golan Heights to Syria.

Assad added that both sides were very near an agreement, and that all that remained was to finalize last details over the precise route of the 1967 line which would serve as the future border between the two countries.

As both sides reached the final stages of talks, Olmert requested a pause in the talks so as to consult with his government. Shortly afterwards, Israel launched its offensive in the Gaza Strip.

"Turkey became exasperated with Israel because it felt duped [because of the Gaza war]," Assad added.

The Syrian leader said he was concerned over the future of peace talks given the make-up of Israel's next government, which in all likelihood will be formed by Benjamin Netanyahu. "I see the finish line moving further away," Assad said. "I am not fearful of Netanyahu, but from the fact that Israel voted for a rightist government. This is the biggest hurdle to peace."

Assad also said he hoped to meet U.S. President Barack Obama and expressed his willingness to help mediate between the West and Iran.

"With the pullout in Iraq, the will for peace, the closing of Guantanamo, (Obama) has shown himself to be a man of his word," he said, referring to the U.S. naval base in Cuba where hundreds of suspected Islamist militants have been held, most for years without trial.

But Assad said it was too soon to speak of a "historic shift" in U.S. foreign policy.

Asked about meeting Obama, Assad said: "Yes, in principle. It would be a very positive sign. But I'm not looking for a photo opportunity. I want to see him, to talk".

Obama has been reviewing U.S. policy toward Syria, including whether to return an ambassador to Damascus. Earlier this month he sent two envoys to Damascus earlier this month, where in a change of tone after years of animosity with Syria, one of the officials said they had found "a lot of common ground".

Washington pulled its ambassador out of Syria after the 2005 assassination of former Lebanese Prime Minister Rafik al-Hariri.

Syria, which is on the U.S. list of state sponsors of terrorism, denies any involvement in Hariri's murder but the United States pointed fingers at Damascus.

Assad said the United States under Obama could play an important role bringing peace to the region. Although he voiced confidence about the growing diplomatic roles of countries like Turkey and France in the area, he said "only Washington can press Israel".

On Iran, which Washington believes wants to build nuclear weapons, Assad said: "... with Iran, I'm ready to mediate".

He urged the West to come up with concrete proposals for Tehran, which he said was "an important country, like it or not". Iran says its nuclear program is for peaceful purposes.

Of Iran's role in Iraq, he said Tehran's influence should not be seen as negative if based on "reciprocal respect" and drew distinction between influence and interference.

"If instead we're talking about facilitating dialogue with Tehran, a concrete proposal is needed to give to that government. Until now, I've only received an invitation to play a role. Agreed, but that's not enough," Assad said.

"What's lacking is a plan, rules and specific mechanisms to put forward to Tehran."