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Demonstrators brandished signs reading "The nation is with the Golan" and greeted Prime Minister Ehud Olmert with catcalls during an appearance by the premier at the closing ceremony of the Jewish Agency's MASA initiative in Latrun on Thursday.

Olmert appealed for calm and urged those in attendance to "put politics aside."

A day after warring neighbors Israel and Syria announced a renewal of peace talks after eight years, Olmert told French Foreign Minister Bernard Kouchner on Thursday that both sides know what they need to do for peace.

"The Syrians know what we want and we know what they want," Olmert told Kouchner.

Olmert told the French foreign minister that the talks with Syria would not detract from peace efforts on the Palestinian front, saying, "Israel intends to hold parallel peace talks [with the Palestinian Authority and Syria] without having one set of talks take precedence over the other."

Israel set terms for concluding a peace deal with Syria on Thursday, closing ranks with Washington in demanding Damascus distance itself from Iran and stop supporting Palestinian and Lebanese militants.

Syrian Information Minister Muhsin Bilal told Al Jazeera television on Thursday that Damascus had received guarantees from Israel via Turkey for a full withdrawal from the Golan Heights and rejected conditions put forth for concluding a peace deal.

We received commitments and messages from the Israeli government and the Israeli prime minister that guarantee, via the Turks, that he knows what the Syrians want," Bilal said.

"He knows that the whole of the Golan Heights will be returned to Syria and that Israel will withdraw to the lines of 4 June 1967," he added added.

The Syrian minister also condemned Israel's setting of any prior conditions.

"These conditions have already been rejected as is the phrase 'difficult concessions' as what the Syrians are de demanding is their right," Bilal told Al Jazeera, in reference to a withdrawal from the Golan Heights.

Olmert has not said publicly that Israel would give up all of the area. But he has spoken of "difficult concessions" Israel would have to make in any land-for-peace accord with Syria and Defense Minister Ehud Barak said both sides would have to make "painful concessions."

Syrian Foreign Minister Walid al-Moualem said Israel had shown that it might return the plateau. "Without this commitment we cannot conduct any negotiation," he told Reuters.

During his talks with Kouchner on Thursday, Olmert also said that Israel still hopes to reach a peace agreement with the Palestinians by the end of 2008. He said that his meetings with Palestinian President Mahmoud Abbas, and the meetings Foreign Minister Tzipi Livni has held with top Palestinian negotiator Ahmed Qureia, have been focused and serious.

Palestinian Prime Minister Salam Fayyad, speaking in the West Bank, said he was not worried Israel would pursue peace with Syria at the expense of progress in the U.S.-brokered negotiations with the Palestinians.

"The concern is if the [Israeli-Palestinian] political process ... does not proceed at the pace necessary," Fayyad told reporters. "I hope other tracks are moving and moving well."

Livni: Syria must renounce support of Iran, Hezbollah and Hamas

Earlier Thursday, Livni said that Syria must distance itself from Tehran and cut ties to Iranian-backed groups like Hezbollah and Hamas if wants to conclude a peace treaty with Israel.

"Israel wants to live in peace with its neighbors but Syria also needs to understand that it needs also full renunciation of supporting terror - Hezbollah, Hamas and of course Iran," Livni said in English.

Continuing her remarks to reporters in Hebrew, Livni called Syria's ties with Iran "problematic", referring to the Israel's accusations that the Islamic Republic sponsors Hamas and Lebanese guerrilla group Hezbollah.

"The Syrians also need to understand that... they must distance themselves completely from their... problematic ties with Iran," she said in Hebrew before the start of a meeting with Kouchner.

Barak addressed the talks in public for the first time on Thursday, tempering high hopes by saying that the way to peace is long.

"The Syrians know that concessions are a two-way street, and the distance from here to a peace agreement is vast," Barak said, speaking at a ceremony of appreciation for Israel Defense Forces reservists at the President's Residence in Jerusalem.

"Peace will come only from a position of power and security," the defense minister continued.

Vice Premier Haim Ramon, who also met with Kouchner, told him that while Israel is ready to make painful concessions for peace, an agreement won't be reached if Damascus continues to provide support to Hezbollah and Hamas, and to serve as Iran's central ally.

Also on Thursday, Al-Hayat, a London-based Arabic newspaper, printed an interview with Syrian Foreign Minister Walid Moallem, who said that an Israeli withdrawal from the Golan Heights is not only a Syrian demand, but a Syrian right.

"Syria won't advance negotiations without a commitment to a full withdrawal from the Golan Heights." He also said that he hopes Israel will display seriousness in the indirect peace talks that have been launched between Jerusalem and Damascus, so that the discussions can develop into direct talks.

Ankara impressed by 'upbeat mood in the talks'

At Syria's insistence, the talks will initially be indirect, with a Turkish mediator shuffling between the two sides. However, Ankara is impressed by the present upbeat mood in the talks and hopes that by next month the time might even be ripe for a direct meeting between Israelis and Syrians, a senior Turkish official said.

The official, who is involved in the Turkish mediation, said this week's meetings in Ankara dealt mainly with "selecting issues for debate and refreshing the issues in agreement."

The Turkish mediator in the talks is Professor Ahmet Davutoglu, the chief advisor to the Turkish Prime Minister on foreign policy. Davotoglu scurried from one office to another this week, passing messages between the Israeli and Syrian delegations.

Davotoglu has recently visited Damascus several times, meeting senior Syrian officials including Syrian Vice President Farouk Shara and Syrian Foreign Ministry legal advisor Riad Daoudi. Daoudi, who probably headed the Syrian delegation for the talks with Israel in Turkey, conducted the talks with Turkey on Israel in the past year. He also dealt with the international investigation into the murder in 2005 of former Lebanese prime minister Rafik Hariri.

Syria is presenting the talks in Turkey as President Bashar Assad's achievement. Syrian commentators said on Arab television networks that the talks were being conducted according to Assad's terms: They were held in public, were based on the Madrid Conference that set the terms of Israeli withdrawal, adopted Israel's willingness expressed in 1995 to withdraw from the Golan Heights in exchange for a full peace and were not conditioned, at least at this stage, on a Syrian disengagement from Iran, Hezbollah or the Palestinian organizations in Damascus.

The Turkish mediation efforts have been going on for over a year. Turkey is trying to prevent Syria's isolation and to curb Iran's influence in the Middle East and assumes that it would be easier to achieve peace between Israel and Syria than between Israel and the Palestinians. Turkey went ahead with the talks over U.S. objections.

"We understood the American displeasure but we are acting on Turkish interests rather than American ones," the Turkish official said.

Asked if Washington had pressured Ankara to block the move with Syria, he said Washington made its position clear "and we made ours clear. I'm sure Washington will be pleased with advancing the process, after all it is supposed to be the 'honest broker' that Assad is looking for."

A Turkish government source told Haaretz that Turkey could lead the mediation a certain way but cannot replace the United States. "It's like a relay race. We do our section and if it succeeds we pass the baton to the Americans," he said.

Another Turkish source said that the move is intended to serve Turkey, Syria and Israel rather than the process itself. "Erdogan is under threat to have his party outlawed over his remarks on women's headcoverings, Olmert is tied up in investigations and Assad needs to break out of his international isolation and the Hariri murder entanglement. A bit of commotion over the peace process will do none of them any harm," a government official said.