TEL-AVIV, June 15 (RIA Novosti) – The Palestinian leadership has issued a resounding rejection of the Israeli prime minister’s policy speech, in which he gave his first endorsement of the creation of a Palestinian state while setting stringent conditions.

The Palestinian president accused Israeli premier Binyamin Netanyahu of destroying the peace process, while the Islamist group Hamas, which controls the Gaza strip, branded the speech “racist”.

In his speech on Sunday night, Netanyahu said Israel would accept a Palestinian state, but only one with no army, no military pacts with other countries, that descendants of refugees ousted in 1948 could never return, that Jewish outposts will remain, and that the Palestinians must immediately resume peace talks with no preconditions.

“Netanyahu’s remarks have sabotaged all initiatives and paralyzed all the efforts being made, and challenge the Palestinian, Arab and American positions,” said Nabil Abu Rdainah, the spokesman for Palestinian President Mahmoud Abbas.

Hamas spokesman Fawzi Barhum said: “This speech reflects the racist and extremist ideology of Netanyahu and denies all the rights of the Palestinian people.”

“This speech is the reiteration of the policy of his government, which aims at transforming the Palestinian people into a tool to protect the occupation,” he told AFP news agency.

Mustafa Barghouti, a Palestinian lawmaker, told CNN that the Israeli premier was effectively calling for the creation of a ghetto state.

In sharp contrast to the Palestinian statements, Western powers largely welcomed Netanyahu’s speech.

The White House said in a statement that President Barack Obama “believes this solution can and must ensure both Israel’s security and the fulfillment of the Palestinians’ legitimate aspirations for a viable state, and he welcomes Prime Minister Netanyahu’s endorsement of that goal”, a view echoed by French Foreign Minister Bernard Kouchner.

Netanyahu’s half-hour speech, seen as a response to Obama’s recent address to the Muslim world and U.S. pressure on Israel to back plans for a Palestinian state, offered no real concessions on Palestinian statehood.

He denied any responsibility on the part of Israel in causing the conflict, saying: “The simple truth is that the root of this conflict has been, and still is, the refusal to accept the right of the Jewish people to have a state of their own,” and that Palestinians must offer “binding and unequivocal Palestinian recognition of Israel” as a “fundamental prerequisite for ending the conflict.”

On the issue of refugees, he said: “the Palestinian refugee problem will be resolved outside Israel’s borders. For it is clear that any demand for resettling Palestinian refugees within Israel undermines Israel’s continued existence as the state of the Jewish people.”

The premier said a Palestinian state must grant Israel full use of its airspace and have no army.

“In order to achieve peace, we must ensure that Palestinians will not be able to import missiles into their territory, to field an army, to close their airspace to us, or to make pacts with the likes of Hezbollah and Iran.”

He said Jerusalem could not be the capital of a Palestinian state.

After listing his terms for Palestinian statehood, he said: “I turn to you, our Palestinian neighbors, led by the Palestinian Authority, and I say: Let’s begin negotiations immediately without preconditions.”