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Palestinian Authority Chairman Mahmoud Abbas said Thursday he hopes to reach a peace deal with Israel within a year, after reportedly receiving a promise from U.S. President George W. Bush that he would push hard to complete a Mideast peace agreement before the end of his term in 2008.

Prime Minister Ehud Olmert intends to start by formulating a declaration of principles with Abbas on the contours of a Palestinian state in Gaza and most of the West Bank, Olmert's aides said Thursday, confirming an earlier Haaretz report.

However, such a declaration would likely sidestep the most explosive issues, such as final borders, an arrangement for Jerusalem and the fate of Palestinian refugees.

Abbas told Meretz Chairman Yossi Beilin during their meeting in Ramallah Thursday that the Palestinian Authority is prepared to achieve a final status settlement with Israel by next fall, when an international Mideast peace conference is scheduled to take place. He said that an agreement of principles, such as that which Olmert intends to formulate, would not be satisfactory.

Abbas also told Beilin that he does not intent to run for another term as chairman of the Palestinian Authority when his current term ends in 18 months at the latest.

Beilin said at the meeting that any agreement signed between Israel and the Palestinians while Hamas is forcibly controlling the Gaza Strip, would only be implemented in the West Bank, where Hamas has no power.

The militant Hamas party overcame Abbas' Fatah faction in the Gaza Strip last month, violently seizing control of the coastal territory.

Beilin added that only a fundamental change in Hamas' policy would enable Israel and the Palestinians to implement a peace deal in Gaza as well.

Beilin also met with Palestinian Prime Minister Salam Fayad, who told the leftist lawmaker that the belief that the West Bank can be turned into a heaven, and Gaza can be turned into a hell, will eventually cause a disaster.

Rice says Israel must end the West Bank occupationIsrael needs to end the occupation of the West Bank, United States Secretary of State Condoleezza Rice said on Thursday in an interview with Radio Sawa, an American Arabic-speaking station.

Referring to a speech delivered by U.S. President George W. Bush last week, Rice said that the president had made it clear that Israel's future should be limited to Israel itself, and concentrate on developing the Galiliee and the Negev.

Rice also said in the interview that a Palestinian state must be established.

The secretary of state will arrive in the region next week along with U.S. Defense Secretary Robert Gates. They will meet with foreign ministers from Egypt, Jordan and the Gulf States.

Rice is also expected to visit Jerusalem, Ramallah and Iraq.

Bush called last week for an international conference on Mideast peace, to be held this fall. Rice said that she expects Middle Eastern representatives with whom she will meet next week to express their support for the conference.

The comments came the day after an historic visit to Jerusalem by the foreign ministers of Egypt and Jordan, who visited as representatives of the Arab League.

Egypt's Ahmed Aboul Gheit and Jordan's Abdelelah Al-Khatib came to promote the Arab peace initiative, which the Arab League summit in Riyadh reaffirmed earlier this year. The two met with Prime Minister Ehud Olmert and Foreign Minister Tzipi Livni and also visited the Knesset.

Amid the flurry of diplomatic activity surrounding attempts at restarting talks between Israel and the Palestinians, a senior government source said Wednesday that Israel is "not far from a photo op with the Saudis."

The source added that talks with the Saudis have been taking place via a third party for some time.

During the meeting with the two foreign ministers, Olmert stressed the importance of other Arab countries joining the peace process, referring mainly to Saudi Arabia.

"We hope Israel and the Palestinian Authority will make sufficient progress in their meetings to create the necessary atmosphere for normalizing relations between Israel and the rest of the Arab world," Aboul Gheit told Olmert.

In response, Olmert said that Israel and the PA "have begun a process of dialogue that will naturally also lead to negotiations with the PA on the main issues that will enable the establishment of a Palestinian state."

"I am determined to create a track that will enable serious talks with Abu Mazen [PA Chairman Mahmoud Abbas]," Olmert continued. "I want it to be clear: Abu Mazen is fully responsible and he is willing to take a chance. There are also risks for Israel, I am not saying that terrorism has ended, but we are sufficiently strong to take such risks."

The prime minister also confirmed that he intends to negotiate with Abbas on a "declaration of principles" for the establishment of a Palestinian state and noted that in addition to the gestures that Israel has already offered Abbas and his prime minister, Salam Fayad, "there are other quiet understandings" in place with the PA.

Al-Khatib told Olmert that the Arab peace initiative is a "historic development" and said that he hoped Israel would begin negotiations with the Arab world on the basis of this initiative.

"Most of the international community and the Muslim countries support the initiative, and we hope that everyone will benefit from it," the Jordanian foreign minister said.

Olmert replied that "Israel is interested in discussing the peace initiative with the Arab states with an open heart and an open mind." He also expressed the hope that on the Arab foreign ministers' next visit, representatives from other Arab states would join them for talks on the peace initiative.

Both foreign ministers stressed that their mission is not meant to serve as an alternative to direct exchanges between Israel and the Palestinians, but only to bolster this process.

At a press conference with Livni, Aboul Gheit said that negotiations between Israel and the Palestinians do not need to start from the beginning; instead, the parties should build on what they had already agreed to in previous meetings.

His Jordanian colleague added that later, Israel must sign agreements with Syria and Lebanon as well.

The two visiting dignitaries also met with the Knesset Foreign Affairs and Defense Committee.

Aboul Gheit told the committee that the Arab League's peace initiative is an opportunity for Israel to improve its ties with 56 Muslim countries, adding that the initiative is not an "all or nothing" deal, but a basis for negotiations.

Likud chairman and leader of the opposition MK Benjamin Netanyahu responded that he opposes the principles of the Arab League's initiative. "The unilateral withdrawal from the Gaza Strip failed," he said, suggesting that other Israeli pullouts would also fail.

"Everywhere that Israel has given up territory has immediately become a terrorist base for extremist Islamic terrorism," he added, referring to Hezbollah in southern Lebanon and Hamas in the Gaza Strip.