Netanyahu says will give up some land for peace

WASHINGTON (Reuters) - Israel is prepared to make "painful compromises" for peace with the Palestinians, including the handover of land they seek for a state, Prime Minister Benjamin Netanyahu told the U.S. Congress on Tuesday.

Palestinians swiftly dismissed the Israeli leader's terms for a deal as placing more "obstacles" in diplomacy's way, casting doubt as to whether frozen peace talks may actually resume anytime soon.

Addressing a joint meeting of Congress, a bastion of support for Israel, after a testy exchange last week with President Barack Obama over the contours of a future Palestine, Netanyahu reiterated his expectations ahead of any talks.

They included Palestinian recognition of Israel as the homeland of the Jewish people and the scrapping of Western-backed Palestinian President Mahmoud Abbas' unity accord with the Islamist movement Hamas.

"Tear up your pact with Hamas. Sit down and negotiate. Make peace with the Jewish state," he said.

"I am willing to make painful compromises to achieve this historical peace. As the leader of Israel, it is my responsibility," the right-wing leader added, echoing a pledge he made in a speech to Israel's parliament on May 15.

"Now this is not easy for me. It's not easy because I recognise that in a genuine peace we will be required to give up parts of the ancestral Jewish homeland," he said, referring to the occupied West Bank.

Netanyahu explicitly suggested for the first time that Israel would cede some Jewish settlements in the West Bank, though others would be annexed under any future agreement.

"In any peace agreement that ends the conflict, some settlements will end up beyond Israel's borders. The precise delineation of those borders must be negotiated," Netanyahu said.

'COMPROMISE MUST REFLECT DRAMATIC CHANGES'

Netanyahu said any "compromise must reflect the dramatic demographic changes that have occurred," referring to Israel's construction of hundreds of settlements on land Palestinians want for a state.

Repeating a message he has delivered consistently during a five-day visit to Washington, Netanyahu said "Israel will not return to the indefensible boundaries of 1967," narrow lines from before Israel captured the West Bank in a war 44 years ago.

Obama drew Israeli anger when he said on Thursday a Palestinian state in the West Bank and Gaza Strip should largely be drawn along the pre-1967 frontiers.

A frosty meeting with Netanyahu followed at the White House on Friday when the Israeli leader, with Obama sitting at his side, rejected those borders.

On Sunday, Obama seemed to ease Israeli anger by making clear Israel would likely be able to negotiate keeping some settlements as part of a land swap in any deal with the Palestinians.

The White House offered a low-key response to Netanyahu's speech. Ben Rhodes, a deputy national security adviser, said in London that the Israeli leader had "reaffirmed the strength of the U.S.-Israeli relationship" and had "pointed to the importance of peace." Obama is visiting London.

Nabil Abu Rdainah, a spokesman for Abbas, said the Israeli leader's vision for ending the conflict put "more obstacles" in front of the Middle East peace process.

"What came in Netanyahu's speech will not lead to peace," Rdainah said in the West Bank city of Ramallah.

On the other side, settler leaders and members from Netanyahu's own Likud party also voiced their objections, but with no diplomatic breakthrough in sight, his ruling coalition did not seem to be in any jeopardy.

Netanyahu was greeted warmly by congressional leaders and received frequent standing ovations. He was heckled once from the gallery by a woman who shouted "No more occupation -- end Israeli war crimes!"

Legislators stood to applaud Netanyahu and police hustled the woman out.

Netanyahu called on Palestinians to see their future "homeland," rather than Israel, as the place to resolve the issue of Palestinian refugees.

Netanyahu again voiced his opposition to a planned bid by the Palestinians to seek U.N. recognition of statehood in September in the absence of peace talks.

"Peace cannot be imposed. It must be negotiated," he said.

(Additional reporting by Susan Cornwell and John McGowan; Editing by Paul Simao)

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