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Herzliya, Israel – Acting Prime Minister Ehud Olmert said Tuesday that Israel will have to give up parts of the West Bank to preserve a Jewish majority inside its borders but would keep the main settlement blocs and Jerusalem.

Olmert, standing in for ailing Prime Minister Ariel Sharon at the annual Herzliya Conference, said the main challenge facing Israel is “setting the permanent borders of the state of Israel to ensure a Jewish majority.”

The speech was the clearest indication of the direction Olmert, the front-runner in March 28 elections, plans to take Israel: out of most of the West Bank and toward a negotiated settlement with the Palestinians.

But he also said Israel would never renounce its claims to Jerusalem and indicated there could be more unilateral withdrawals like the one from Gaza last summer.

In his first policy address, Olmert said Israel would have to make further pullbacks.

“The choice between allowing Jews to live in all parts of the land of Israel and living in a state with a Jewish majority mandates giving up parts of the land of Israel,” Olmert said. “We cannot continue to control parts of the territories where most of the Palestinians live.”

Olmert, a former mayor of Jerusalem, said Israel “will keep security zones, main settlement blocs and places important to the Jewish people, first of all, Jerusalem, united under Israeli control. There can be no Jewish state without Jerusalem under Israeli sovereignty.”

He said it would be a “historical mistake to let the Palestinians escape their commitment to dismantle the terror groups.” He said Israel would insist on implementing the “road map” peace plan, which requires the Palestinians to stop violence.

Emphasizing a part of the “road map” plan that has been largely ignored, Olmert said the Palestinians could have a state in the West Bank and Gaza “even before the toughest issues are resolved,” a reference to the second phase of the three-stage program, calling for creation of a state with interim borders.

Palestinians have been cool to the idea up to now.

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