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Prime Minister Ehud Olmert yesterday proposed negotiations with Palestinian Authority Chairman Mahmoud Abbas over the establishment of a Palestinian state that would enjoying territorial contiguity in the West Bank, and promised that Israel would agree to "evacuate ... any communities which were established therein."

Olmert also promised, in a speech delivered at Sde Boker, to release many Palestinian prisoners in exchange for the return of abducted soldier Gilad Shalit, including prisoners sentenced to long prison terms.

Meanwhile, the PA asked Israel yesterday to refrain from responding to the sporadic Qassam rocket attacks. Israel, for its part, asked the Palestinians to use their security forces to ensure that no rocket are launched from the Gaza Strip and warned that words are not enough.

In his speech, made at an official memorial ceremony for Israel's first prime minister, David Ben-Gurion, Olmert called on the Palestinians to cease terrorism and warned against a resumption of violence.

"You must stop the terror, violence and efforts to harm Israeli citizens ... recognize our right to live in peace and security next to you, and relinquish your demand for the realization of the right of return. It is a right goal, a natural goal, an attainable goal," Olmert said.

"Do not put us to another test, which will involve many casualties and destruction, and which will lead to total hardship and despair. The past cannot be changed, and the victims of the conflict, from both sides of the border, cannot be returned," the prime minister warned.

But Olmert also put forth a list of preconditions for the start of negotiations. "If a new Palestinian government is established, a government which will be committed to the principles of the Quartet, implement the road map and bring about the release of Gilad Shalit, I will invite Abu Mazen [Abbas] to meet with me immediately, in order to conduct a real, open, genuine and serious dialogue between us," he said.

"In the framework of this dialogue, and in accordance with the road map, you will be able to establish an independent and viable Palestinian state, with territorial contiguity in Judea and Samaria - a state with full sovereignty and defined borders. In this framework, the borders of the State of Israel will be defined, in accordance with President Bush's April 14th, 2004 letter to prime minister Ariel Sharon."

With regard to prisoners, the prime minister said: "I hereby declare that when Gilad Shalit is released and returned to his family, safe and sound, the government of Israel will be willing to release numerous Palestinian prisoners, including ones who were sentenced to lengthy prison terms ... I know that many Palestinian families yearn for the day when their loved ones will return home. This day could be very close."

Olmert said that if terrorism stops, Israel will undertake a series of steps to improve the Palestinians' quality of life. "We will significantly diminish the number of roadblocks, increase freedom of movement in the territories, facilitate movement of people and goods ... improve the operation of the border crossings to the Gaza Strip, and release Palestinian funds for the purpose of alleviating the humanitarian hardship which many of you suffer. We can assist you in formulating a plan for the economic rehabilitation [of the PA] ... We can assist you in the establishment of industrial zones ... to create places of employment ... and to relieve you of your ongoing dependence on Israel."

The prime minister also called on the governments of Jordan, Egypt, Saudi Arabia and the Gulf states to give their backing to Israeli-Palestinian negotiations and "contribute their experience."

According to Olmert, "the international circumstances which were created ... allow you and us to take a courageous step, which involves the need to make painful compromises and forgo those dreams which were part of our national ethos for so many years, and to open a new chapter offering hope for a better life for all of us."

In his address, Olmert quoted Ben-Gurion as having said that "in exchange for true peace, Israel must relinquish a vast majority of the territories occupied in the Six Day War."

"Much has happened since then," he noted. "Facts were established on the ground, agreements were signed, the international and regional arena changed beyond recognition. The bloody conflict with the Palestinians has not ended. Ben-Gurion's basic diagnosis remained valid and continues to guide, with the necessary amendments, the position of Israeli governments in our peace policy today."

Olmert's peace-oriented address and the cease-fire in the Gaza Strip have led to a flurry of diplomatic activity, including a planned visit to Jerusalem on Thursday by U.S. Secretary of State Condoleezza Rice and rumors of a possible summit meeting.

U.S. President George Bush and his secretary of state are on their way to Jordan for talks on Iraq, but originally, Rice had no plans for a visit to Israel.

Egyptian intelligence chief Omar Suleiman will visit Israel tomorrow for further talks on a prisoner exchange between Israel and the Palestinians. Suleiman will update his Israeli interlocutors about his meetings in Cairo over the weekend with exiled Hamas strongman Khaled Meshal and discuss details of scenarios for the prisoner exchange, as well as ways of bolstering the cease-fire and stabilizing the PA's political situation.

Today, U.S. envoy Elliott Abrams is due to arrive in Israel and meet with Olmert. Abrams will prepare Rice's visit to Jerusalem.

It is not yet clear whether the recent developments are leading to a three-way summit in Jordan involving Bush, Olmert and Abbas, but the possibility "is in the air," a source in Jerusalem said yesterday. So far, however, there have been no signals to that effect from Washington.

"It is not clear that Bush is interested in a summit at this time," the source said. "He is coming to the region to deal with Iraq."

It also appears that Olmert is not thrilled about the possibility of a summit.

Several weeks ago, Rice had proposed taking advantage of the president's visit to the region to hold a summit with Olmert and Abbas, in an effort to reignite the peace process. But the Palestinians' failure to establish a unity government in the ensuing weeks led to the abandonment of this idea.