Israeli President Shimon Peres said Saturday that he hoped to have an outline of a peace deal with the Palestinians before an international conference in November.
In an interview with the Nikkei business daily, Peres said he would seek to make peace with the Palestinians by promoting economic aid and political negotiations in tandem.
"I think we have a good chance now because the whole world is supporting (Palestinian president Mahmoud) Abbas," he told the paper.
"To work out the details (of the political if not the geographical outline of a future Palestinian state) will take more time, but (as for) principles, yes, we can achieve an agreement" before the autumn peace conference, he said.
Improved economic conditions in areas governed by the Palestinian Authority will lead to a greater likelihood of it accepting the idea of peaceful coexistence with Israel,
"We shall go in a policy of two tracks, economic development and political negotiations, one complementary to the other but not dependent upon it," he said.
Japan resumed direct financial aid to the Palestinians this month when Foreign Minister Taro Aso signed a multi-million dollar aid package for the Western-backed government.
Aso signed the deal with Palestinian prime minister Salam Fayyad in the West Bank town of Ramallah during his regional tour.
Japan has tried to increase its visibility in the Middle East in line with its aspirations for a greater global role.
Japan, the world's second-largest economy and a major donor to the Middle East, suspended direct aid to the Palestinians in 2006 after the Islamist Hamas movement, considered a terror group in the West, won elections.