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Israel wants to discuss peace with Palestinians, says Netanyahu.

Israeli Prime Minister Benjamin Netanyahu said there was a possibility of reviving a 2002 Arab peace initiative that offered Israel diplomatic recognition from Arab countries in exchange for an agreement on a Palestinian state; Arab nations pledged to normalize relations with Israel after the country withdrew from all territories occupied in 1967.

Israel wants to discuss peace with Palestinians, says Netanyahu (Photo: REUTERS/Stringer)

By Ori Lewis

JERUSALEM (Reuters) Israeli Prime Minister Benjamin Netanyahu said on Monday that there was a possibility of reviving a 2002 Arab peace initiative that offered Israel diplomatic recognition from Arab countries in exchange for an agreement on a Palestinian state.

Netanyahu's statements were a formal response to a speech made last week by Egyptian President Abdel Fattah al-Sisi, who promised closer relations with Israel if the country accepted efforts to resume peace negotiations.

"The Arab peace initiative has positive elements that can help in resuming constructive negotiations with the Palestinians," Netanyahu said, echoing statements he made a year ago to Israeli journalists.

"We are willing to negotiate revisions to that initiative with the Arab states so that it reflects the drastic changes in the region since 2002, but maintains the agreed objective of two states for two peoples," he added.

The statements were also made in English in a speech that was mostly in Hebrew, something Netanyahu usually does when he wants to make a statement to the international community.

Netanyahu spoke moments after ultranationalist Avigdor Lieberman was sworn in as Israel's new defense minister and the fragile right-wing coalition won vital support in Parliament.

Lieberman agreed, and the prime minister seemed to indicate that the arrival of the new far-right minister does not mean an end to peace efforts with the Palestinians.

The original Arab plan offered full recognition to Israel, but only if the country relinquished all territory seized in the 1967 war and agreed to a "just solution" for Palestinian refugees.

However, in 2013, after the terms of the initiative were softened to include possible land swaps between Israelis and Palestinians, Netanyahu signaled that he would be ready to consider it.

Palestinians say that the expansion of Israeli settlements denies them the state they seek in the occupied West Bank, the Gaza Strip, with its capital in East Jerusalem.