THE Israeli Prime Minister Mr Benjamin Netanyahu, said yesterday he was ready to fulfil all existing agreements with Arab countries, but refused to commit himself to the principle of land for peace, the basis of peace negotiations for the past five years.
"Peace must be based on fulfilling existing agreements ... we agree on the principles of the Madrid peace conference and we have signed it," he said during a joint press conference with President Hosni Mubarak of Egypt.
But when asked if this meant he had modified his position on land for peace, he replied: "There are different interpretations on how to apply land for peace. The best way to proceed is to go back to the last agreed upon framework and that is Madrid, and we agree to Madrid."
Mr Netanyahu made his remarks after talks with Mr Mubarak, his first meeting with an Arab head of state since he took office after narrowly winning the Israeli elections at the end of May.
The Prime Minister's refusal to endorse the principle of returning Arab lands seized by Israel in return for peace has angered the Arabs and threatened to sabotage the entire Middle East peace process.
Last month, Arab leaders held their first summit in six years to forge a common position in the face of the Israeli leader's policies and warned they would halt all normalisation with the Jewish state if the new government went back on any prior agreements.
In the run up to yesterday's meeting, Mr Mubarak held consultations with a number of Arab leaders including the Palestinian President, Mr Yasser Arafat, who the Israeli Prime Minister has so far refused to meet and was expected to urge Mr Netanyahu to modify his stance.
Despite the Prime Minister's apparent reluctance to do so, both leaders were anxious to emphasise the positive aspects of the meeting, saying it was an important first step towards putting the peace process back on track.
"After our meeting, I can say that . . . I have great hopes that the peace process will continue," said Mr Mubarak. "I think we're clearing the air, and it's very good air," added Mr Netanyahu.
But despite his conciliatory tone, the Israeli hardliner appeared to have made few concessions to the Egyptian president.
He affirmed that he would implement the Oslo accords and negotiate with the Palestinians, but remained vague about whether he, would meet Mr Arafat personally. He also stated his desire to "move forward" in negotiations with Syria, but criticised Syrian "behaviour" in Lebanon.
On another sticking point, Jewish settlements, he was similarly non committal, saying only "we will consider our policies in the course of our government".
Mr Netanyahu's comments appeared to be a step back from the tough approach he maintained during his first official visit to the US. The apparently fresh attitude of the Israeli leader prompted an upbeat Mr Mubarak to say that their meeting had left him optimistic on the future of the Middle East peace.
Mr Mubarak said yesterday the Israeli leader was moving towards peace. "When I met him today I had a clear picture about what could happen, a clear picture that he is going towards the peace process," Mr Mubarak said. "He is ready to negotiate here and there. This gave some kind of relaxation."
A senior Israeli government official told reporters travelling with Mr Netanyahu: "The Egyptians misinterpreted the [Prime Minister's] remarks in Washington. They thought the new government was going to halt all progress in the peace talks.
"In today's meeting, it became clear to Mubarak that the government wants to advance the talks."
Mr Netanyahu said: "We believe that the peace should be based on the idea of fulfilling existing commitments - that is all existing treaties are made to be fulfilled. This involves the principle of reciprocity. We keep our commitments and we expect the other side to fulfil their commitment."
Mr Netanyahu announced at the press conference that his government would allow 10,000 workers from self ruled areas into Israel, slightly easing a five month closure of the Palestinian areas.