Fayyad stressed in his address that "the state being built here is Palestinian, and who should build it rather than us? A peace process is needed, because this will lead to the end of the occupation.
"We want to be ready for a state which is about to be established, and we are ready to establish it by 2011. We are encouraged because we have made progress in creating an infrastructure in the past two years."
According to the Palestinian prime minister, "We did not get our rights from the Israelis. I believe it is important that the process of recognizing the Palestinian state will be accepted by the international community. There cannot be peace unless the perception that the Palestinians must have a state is fully accepted."
He hinted that he expects additional gestures: "Too much time has been invested in issues between the lines and not on the actual matter. We are currently in a situation of political deadlock. There is not practical dialogue. There have not been negotiations for the past 16 years and we have lost a lot of time.
"Instead of returning to the Oslo Accords, we must be led by a way which will make us understand that the occupation is about to withdraw. We need a political horizon which will result in a Palestinian state. We, the Palestinians, want to live next to you, in peace, security and welfare."
Barak and Fayyad shaking hands (Photo: AFP)
Fayyad addressed the Palestinian Authority's demand for a complete settlement freeze, clarifying that Israel must evacuate the settlements as part of a permanent agreement.
"The Palestinian state must be built in the areas where the settlements are today. One of the main ways to move forwards towards an implementation of the Road Map is by stopping Israel's infiltration into territories slated to be part of our state.
"People ask why the Palestinians are making so much noise when it comes to the settlements. The issue is presented in a very materialistic manner, and they are trying to present it in a very simplistic manner. The Palestinians declare that their state must be built exactly on the territories you are building on."
He left no room for doubt on what those territories include, saying that "east Jerusalem is an integral part of the future state of Palestine."
Addressing Barak's remarks as to Israel's demand for sufficient security arrangements, Fayyad called on the Jewish state to hand over to the PA the security responsibility for additional areas in the territories.
"Security is also a Palestinian interest, not just an Israeli one," the Palestinian prime minister said. "It's time to stop the IDF raids. The Palestinians can have an official security presence outside Area A as well."
He also said that he does not agree with Barak's statement that the Middle East is a "tough neighborhood".
"Today this situation has changed," he said. "If the Palestinians have the right to live in a state of our own alongside the State of Israel, we will be able to guarantee security. I agree with Mr. Barak that there must be stability, security and peace, but I believe that this will not happen unless a Palestinian state is established."
As for the Hamas control of the Gaza Strip, Fayyad said that "the Palestinian state must be united, and the separation between Gaza and the West Bank must end. I believe that our people must enjoy a sovereign right to hold elections.
He criticized Israel's policy towards Hamas in Gaza, saying that "the blockade on the Strip is a mistake that must be stopped, and this will help the dynamics in reuniting the state. Continuing the siege will not lead to a positive solution."
Fayyad concluded by saying that "the people in Israel have a long history of pain and aspirations. We respect that, because we too have experienced pain and suffering throughout history, and our aspiration is to live beside you in peace and harmony."
Barak: Peace agreement seems far away
Earlier, Defense Minister Barak said in his speech that during his term as prime minister, he had told then-PA Chairman Yasser Arafat and Palestinian President Mahmoud Abbas that "the toughest decisions must be made while facing your people, and (Prime Minister Benjamin) Netanyahu will also have to make tough decisions with our public.
"The decisions are tough. Israel has a silent majority in favor of peace, although it leans to the right in the voting station," he said.
According to Barak, "Under the surface, there has been a change on the Palestinian side as well. Salam Fayyad has brought about a Palestinian entity, concrete and practical thinking about building an economy, institutions and more, and a demand to recognize their results.
"I am a great believer in cooperation and in reaching out when possible. We have a responsibility for the security issue. The settlers are also saying that the security situation is better than ever, and that is thanks to the work of both sides."
The defense minister went on to call on the Palestinians to return to the negotiation table, saying that the Hamas rule in the Strip cannot continue. "We have several challenges. Hamas controls Gaza and this has to change. And in the security challenge, we don't want to be left without security arrangements when we reach an agreement. The negotiations will take time, but it's time to reach them."
Despite some ministers' objection to the two-state solution, Barak clarified that "our government's stand is clear. It has adopted the Road Map and accepted the two states for two people principle. The goal is to end the conflict and establish a Palestinian state."
Nonetheless, he concluded his speech in a pessimistic tone, saying that "a reality of a peace agreement, today, looks far away."
Before taking the stage, the defense minister shook hands with the Palestinian prime minister. Sources in Fayyad's entourage said he had received death threats following his decision to attend the conference.