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Defense Minister and Labor Party Chairman Ehud Barak said recently that despite the goodwill of Palestinian Authority Chairman Mahmoud Abbas and Palestinian Prime Minister Salam Fayad to move toward a settlement, it is doubtful that they would be able to implement one.

However, Prime Minister Ehud Olmert told a gathering of Kadima party members on Thursday that "there is a partner" for dialogue in the Palestinian Authority.

The Kadima gathering at the party compound in Petah Tikva Thursday evening was the first of its kind and followed demands from party ministers and MKs who wanted updating on the discussions Olmert had been having with Abbas.

Some senior party members had criticized the efforts of Olmert and Vice Premier Haim Ramon to move forward in talks with the Palestinians, expressing concern that they were leading Israel into a rash diplomatic scenario.

At the meeting, Olmert said that "for many years we have made do with the call 'there is no partner.' Now, as all signs seem to show, there is a partner."

In discussing his talks with Abbas, Olmert said "we want to reach understandings that will lead at a later stage, assuming the conditions are ripe, toward an agreement. It is for this purpose that a continuous and direct dialogue between the two sides must be held."

The prime minister added that the trust that has been created between Abbas and him during their last meeting allowed them to discuss sensitive issues. Teams from both sides will try to formulate a joint declaration prior to the regional summit, the PM said, before it is held in Washington in November.

Later in his address, the prime minister said that on Sunday he would bring before the government a proposal to release Palestinian prisoners as part of a gesture to bolster the Abbas government.

Olmert stressed that the prisoners involved "have no blood on their hands," a euphemism used in Israel to describe Palestinians imprisoned for violations that were not related to the murder of Israelis.

He also said that he will recommend that a series of moderate gestures be made to bolster the moderates in the Palestinian Authority.

"This is the way to signal to the entire Palestinian society that only through negotiations can results be achieved. In parallel to the goodwill gestures, we will continue to combat terrorism," Olmert vowed.

Finance Minister Roni Bar-On told Olmert that Kadima will back him but the party members will need to be party to what is going on from the onset "and we will demand that decisions are made with us all, and that the negotiations are conducted with patience, not in a rush."

Bar-On expressed the criticism of many other, more rightist Kadima ministers, including Shaul Mofaz, when he addressed Ramon and called on him "not to beach ourselves on the shore like whales wanting to commit suicide."

The finance minister's words referred to a famous Ramon speech during his days as a Labor maverick; Bar-On was being critical of Ramon views on the division of Jerusalem, as reported in the media.

For his part, Mofaz called on Olmert and asked for his commitment not to move in directions that were contrary to the party consensus, saying that those will require the approval of Kadima organs.

Foreign Minister Tzipi Livni said that Kadima has a political platform, and that it should be adhered to.

According to Livni, the Abbas and Fayad government represent an opportunity, but "success for me is not just a document that can also be a very serious problem if it does not represent the security interests of the State of Israel."

Referring to the joint declaration with the Palestinians that the two sides have been working on, Defense Minister Ehud Barak said this week that "it must be sufficiently substantive, so that the Palestinians do not feel humiliated and exploited."

However, he also said that "it must be sufficiently general, so Israelis do not feel like they are suckers who have made substantive concessions on core issues without receiving anything in return."

Barak proposed that the government hold exhaustive discussions on Israel's positions and assess the degree of flexibility expected on the part of the Palestinians during the negotiations for a declaration of principles that will be presented during the summit in Washington.

The defense minister believes that Israel must avoid presenting opening views that will be considered binding during later stages of the negotiations. He is also opposed to including in the joint declaration a clause stating that the future border between Israel and the Palestinian state will be based on the 1967 lines. His proposal is to include less explicit wording that will reiterate United Nations Security Council Resolution 242.

Barak is also opposed to any mention of UN General Assembly Resolution 194, which the Palestinians use to interpret as international recognition to their demand for a right of return of refugees.