Promised Land?

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JERUSALEM: Before Benjamin Netanyahu won the Prime Ministership from Shimon Peres, Israeli officials had already struck a deal to create a Palestinian state, according to a senior adviser to Peres. In exchange for statehood, the Palestinians were prepared to drop demands for a capital in East Jerusalem, and allow Israel to annex about 10 percent of the West Bank. That understanding has been tabled by Netanyahu. His spokesman describes the deal as an "intellectual exercise," since neither side had formally agreed to them. Peres and Arafat reportedly had some doubts about the proposed settlement, but felt the understandings might serve as a useful basis for negotiations, said Ibrahim Khreishe, a senior Palestinian Authority official. "The notion that Peres was ready to accept a Palestinian state is not a secret," says TIME's Johanna McGeary. "The question is, how accurate is this depiction of the negotiations? Were these talks real negotiation or purely speculative talk? At any rate, Netanyahu will never agree to such a settlement. He has to continue talking like a nice guy, but there is no reason to feel hopeful he will change his hard-line position." -->