Prime Minister Ehud Olmert said Monday that the price of an agreement with the Palestinians would "move us very close" to an exchange of equal amounts of territory, and that this must be stated "honestly and courageously." The alternative to an agreement is a binational state, an idea, he said that "ever-growing segments of the international community are adopting."

Speaking at a meeting of the Knesset Foreign Affairs and Defense Committee, Olmert said the agreement now being formulated would give the Palestinians 100 percent of the West Bank, or territory of a similar area.

"I'll still be here," he told committee members who said they wanted to take advantage of the opportunity to wish him good-bye, in light of the Kadima primary Wednesday, which is expected to result in his resignation.

According to Olmert, by the end of 2008, it should be possible to attain understandings with the Palestinians on three issues: borders, security and refugees. However Olmert stressed that the implementation of the understandings is conditioned on the application of the Bush road map and eradication of the Palestinian terrorist infrastructures, and so implementation will take place at a much later stage. "It is important to reach understandings, even if their implementation is delayed," he said.

With regard to the refugee issue, Olmert said "under no circumstances will there be a right of return, but we are willing to be part of an international mechanism that will deal with a solution to the problem. I share in expressing regret over what happened to the Palestinians in 1948 and also to the Jews who were deported from Arab countries."

Olmert also said: "We will be sorry for every day that goes by without an agreeement with the Palestinians, and the person saying this is one who once held different opinions and even fought for them." Olmert said the price of not reaching an agreement quickly would be "intolerable."

Olmert said that even exchanging equal territory with the Palestinians would be "less than what we will have to pay in the future."

According to Olmert's proposal, the Palestinians would receive 93 percent of the West Bank and the equivalent of another approximately 5.5 percent of territory, in the Negev adjacent to the Gaza Strip, in exchange for the large settlement blocs, which would be annexed to Israel. Olmert has also proposed an international compensation mechanism for Palestinian refugees and the symbolic return of a few thousand such refugees without
Israel recognizing the right of return or responsibility for the creation of the Palestinian refugee problem.

Olmert reportedly wants to postpone discussion of Jerusalem, and to hold talks on that subject in a broad international framework.

The prime minister told the committee that there is a concern over "the entrenchment of the narrative of a binational state, in which we will not be the majority. Ever-growing segments of the international community are adopting the idea of a binational state. I see a Jewish state as a condition for our existence."

Olmert said an agreement would lead to international recognition of Israel's borders in the context of a two-state solution.

With regard to talks with Syria, Olmert said "when there is a price and in return the disengagement of Syria from the axis of evil, the question is whether it is worth paying the price." Banging on the table to emphasize his point, Olmert said "the answer is yes." He added that a "responsible government will arrive at my answer, and an irresponsible government will reach opposite answers."

Olmert told the committee that if Israel could reach an agreement with Syria, it could also reach an agreement with Lebanon, despite risks, which a strong government could take upon itself.

In response to a question about his position on exchanges of territory and populations, he said: "I am not in favor of taking a million Arabs out of Israel." Olmert said that an agreement with the Palestinians would make it much easier to solve problems involving Israel's Arab citizens.

MK Yuval Steinitz (Likud) created a stir when he said, referring to the border route between the southern Gaza Strip and Egypt: "The person who gave up the Philadelphi Route is an idiot." Olmert's bureau said they understood Steinitz was referring to the prime minister. However Steinitz responded that he was referring to "a minister whose name I am not prepared to mention in order not to influence the primary."