The Israeli media also quoted Olmert as saying there was a "revolutionary change" in the perception of Arab states towards Israel.
 
"There is a process here that the fighting in Lebanon (last year) has sharpened," Olmert was quoted as saying during a reception for his Kadima party.
 
"This process has brought the influential countries in the Arab world to begin to realise that Israel is not the biggest of all their troubles.
 
"This is a revolutionary change in their perception."
 
Riyadh summit
 
Olmert described the this week's Arab League summit in the Saudi capital, Riyadh, as "definitely a serious affair".
 
At the summit, Arab states recommitted themselves to a 2002 peace 'land-for-peace' proposal to Israel.
 
Israel immediately rejected the offer but said it could provide a starting point for negotiations.
 
"We do not delude ourselves. They want us to return to 1967 borders and they also want the right of return (for Palestinian refugees)," he was quoted as saying.
 
Israel has objected to both those proposals.
 
"The content is important, but it is also necessary to take into account the atmosphere, the positioning and direction (of the summit)," Olmert was quoted as saying.
 
'Money transfer'
 
Israel has vowed to boycott the Palestinian unity government which is a coalition between of Hamas and Fatah.
 
"Haniya transferred over a million dollars for a group of terrorists to carry out terrorist actions against Israeli citizens," Olmert said.
 
Olmert said the funds came from outside the Palestinian territories and were transferred to one of Hamas's armed wings for the "explicit purpose of carrying out terrorist actions".
 
He offered no other details about the transfer.