Leaders from both sides addressing the World Economic Forum in the Swiss resort of Davos on Friday hailed the new mood of goodwill since the 9 January election of Palestinian President Mahmud Abbas after more than four years of bitter armed conflict.

   

Palestine Liberation Organisation official Yasir Abd Rabbu said in Davos the dream of a new partnership could be destroyed if Israel continued expanding West Bank settlements and building its security barrier on occupied Arab land.

   

"With what is currently going on on the ground, building the wall around the Palestinian populated areas and the expansion of the settlements, I'm afraid my dream will be lost," he said.

 

Pullout plan

 

"We cannot be subcontractors for unilateral Israeli moves," Abd Rabbu said of Sharon's plan to pull out of Gaza over the summer, handing authority to Palestinians.

   

Palestinian President Mahmud
Abbas won praise in Davos

"We need a comprehensive solution that will close all the gaps. Side by side with the Gaza step, there should be a resumption of the final status negotiations."

 

Abbas has persuaded resistance groups to observe a de facto truce and deployed Palestinian security forces to stop rocket attacks on Israel.

   

Israeli Vice Prime Minister Shimon Peres, whose Labour Party recently joined a national unity government with Sharon's right-wing Likud, said he was surprised and impressed by Abbas' rapid implementation of security measures in Gaza.

 

Meeting of minds

   

"This is the first time someone has taken on leadership and in a few days changed the entire atmosphere," Peres said of Abbas. "All of a sudden there is a meeting of minds and moods."

 

"A window of opportunity, a dramatic change is shaping up and taking place," Israeli Vice Prime Minister Ehud Olmert, a close ally of Prime Minister Ariel Sharon, told world business and political leaders.

   

"We need a comprehensive solution that will close all the gaps"

Yasir Abd Rabbu,
PLO official

Olmert offered to start immediate talks with the Palestinians on handing over control of the Erez industrial zone on the Israel-Gaza border, which he said could be the nucleus of an independent Gaza economy.

   

But Palestinian Finance Minister Salam Fayyad cautioned: "Important though it is, economic development is no substitute for a credible, durable progress on the political track."

 

Future meeting

   

World Economic Forum founder Klaus Schwab called for the forum, which has met for the past 35 years in Davos except for one session in 2002 in New York, to hold a future meeting in the West Bank town of Bethlehem, biblical birthplace of Jesus, to show support for a two-state solution.

   

He presented the leaders with mementoes of mountain crystal on plates inscribed: "World Economic Forum, Bethlehem - date to be announced soon."