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Prime Minister-designate Benjamin Netanyahu said yesterday that his government will be willing to offer "generous concessions" in exchange for peace with the Palestinians. He was addressing the Knesset during an extraordinary session marking the 30th anniversary of the Israel-Egypt peace treaty, whose attendees included the Egyptian and Jordanian ambassadors.

"President Anwar Sadat's historic plea, 'no more war,' led Israelis into being ready to make generous, far-reaching concessions for peace," Netanyahu said. "Whenever Israel stands before an Arab leader who is genuinely committed to peace, it behaves in the same manner. Israelis know how to spot genuine peace when they see it, and are willing to go far on its behalf. The Israeli people strives for peace, dreams of peace, longs for peace," Netanyahu said.

He continued: "The government that I am about to form will do all in its power to reach peace with all our neighbors and with the entire Arab world. Each of our neighbors who is geniunely ready for peace will find our hands outstretched before them," Netanyahu said. He apparent reference to both Syria and the Palestinians, Netanyahu noted that Sadat "didn't talk peace while planning war and didn't conduct negotiations while giving asylum to terror organizations."

On Thursday, his second day on the job, Netanyahu is expected to hold a comprehensive security and foreign policy review, focusing on the new government's intentions in the Palestinian and Iranian arenas. It is not yet known whether it will be attended by the prime minister's closest advisers only, or by the full cabinet as well as representatives of the Foreign Ministry and the defense establishment.

In his final address to the Knesset, Prime Minister Ehud Olmert turned to his successor, saying: "We must not miss the historic opportunity to realize the vision of two states for two peoples. There is no alternative. There is no State of Israel without a solid Jewish majority and there is no Jewish majority in Greater Israel, which is home to millions of Palestinians," Olmert said.

The outgoing prime minister said Israel was close to reaching an agreement with the Palestinians. "If we had had the time, I believe we could have submitted an agreement to the Knesset for its approval. It would have meant a dramatic and heartbreaking, but necessary, compromise.

"We were on the brink of direct talks with the Syrians," Olmert continued, calling on Netanyahu to "accept painful, heartrending concessions" to reach peace with Damascus. "Take the initiative courageously and history will judge you well."