Olmert hopeful of Mideast peace

Prime Minister Ehud Olmert said Wednesday that he was hopeful of achieving peace between Israel and its Arab neighbors, some of whom were showing "first signs of understanding" towards the Jewish State.

"We are seeing the first signs of understanding from countries who never had relations with us, who now understand that Israel is a power whose existence cannot be ignored," Olmert told members of the State of Israel Bonds in Jerusalem.

"The road remains long and our enemies are many, but there are also first signs of developments that point to the chance that in the coming year we will manage to make progress towards resolving the conflicts with our neighbors, especially with the Palestinians," he said.

The prime minister warned however that Israel would defend itself from all its enemies should the need arise. "We will not let go for one moment the necessary power to face all enemies, as close or far as they may be," he said.

"Our enemies know our might. But we will spare no effort in taking steps towards peace," Olmert added.

Olmert said his government was ready to help the Palestinians establish a sovereign state that would coexist "beside Israel and not instead of Israel”.