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Former prime minister Ehud Olmert offered Palestinian Authority Chairman Mahmoud Abbas that the Holy Basin area of Jerusalem would be under no sovereignty at all and administered by a joint committee of Saudis, Jordanians, Israelis, Palestinians and Americans, the former prime minister told Newsweek magazine in an interview in the current issue.

The proposal to internationalize the Holy Basin was intended to achieve a breakthrough in the negotiations around the issues of sovereignity over holy sites in Jerusalem, the issue which had reportedly caused the breakdown of the Camp David talks in July 2000.

Olmert's proposal implies Israeli willingness to give up sovereignity over the Temple Mount, the Old City and the Mount of Olives. The offer appears to contradict Olmert's promise to Shas never to negotiate over Jerusalem and was never revealed to the Israeli public while he was in office. However, Newsweek notes the offer was made in September 2008, when Olmert was heading a transition government and had already resigned from his post, rendering coalition considerations irrelevant.

Olmert also told Newsweek he suggested to Abbas Israel would withdraw from 93.5 to 93.7 per cent of the West Bank, compensating the Palestinians with territory equivalent to 5.8 per cent of the West Bank, and allow for direct crossing between the West Bank and the Gaza Strip.

He stressed he rejected Palestinian demands to realize the right of return, and instead offered a "humanitarian gesture" of accepting a small number of Palestinian refugees, "smaller than the Palestinians wanted, a very, very limited number."

Olmert's offer was confirmed to Newsweek by Saeb Erekat, the chief Palestinian negotiator. "It's very sad. He was serious, I have to say," Erekat said. He said that he and Abbas began preparing a response, but within a few months the Gaza war erupted, and Olmert had left office.

Olmert spoke to Newsweek's Kevin Peraino shortly before leaving for New York for prostrate cancer treatment.