At the opening of the Knesset's winter session Monday, Prime Minister Ehud Olmert said that Israel must either surrender Judea, Samaria and Gaza for an Arab state or face a violent demographic struggle.

The Pime Minister told the assembled legislators that negotiations with the Fatah-

The Prime Minister's words of caution may have been intended to deflect growing criticism.

controlled Palestinian Authority must continue. He said that Israel has only two strategic options at the moment: create a Palestinian State or face a bitter fight to maintain the current character of the Jewish state.

"Israel has excellent excuses that justify a freeze on negotiations," Olmert acknowledged in his speech to the Knesset, "but I'm not interested in excuses. I'm determined to give the political process a chance.... Every other option means a tear-soaked demographic struggle."

In a speech to a gathering of Kadima party representatives before the Knesset session on Monday afternoon, Prime Minister Olmert touched on the theme of his commitment to negotiations. "I will not miss any opportunity" for negotiations with the PA, he said. He emphasized, however, that the efforts are not guaranteed to reach a positive conclusion. "Perhaps, and I emphasize 'perhaps,'" negotiations with the PA will succeed, he cautioned.

The Prime Minister's words of caution may have been intended to deflect growing criticism from within his Kadima party over what critics say is a danger that Israel will be forced to make major concessions at an upcoming international conference on the Middle East. The US-sponsored gathering of dozens of nations is expected to be held in Annapolis, Maryland next month.

On Sunday, Prime Minister Olmert told the Cabinet that Israel will not make any strategic concessions at the Annapolis conference. He agreed that there are doubts over the ability of Abbas to carry out any signed agreements, but he said that Israel must nonetheless take advantage of the "window of opportunity" to establish a new Arab country within Israel's current borders.

Dividing Jerusalem

One of the more controversial aspects of the deal reportedly worked out between Prime Minister Olmert and PA Chairman Mahmoud Abbas includes a division of sovereignty over Jerusalem. However, Olmert has vehemently denied a report in the London-based Arabic-language Al-Quds Al-Arabi newspaper that he and Abbas have agreed to turn over control of Muslim holy sites in the Old City to the Jordanian government, as well as granting Jordanian citizenship to Arabs in eastern Jerusalem neighborhoods.

"The idea never existed," the Prime Minister's Office stated.

Vice Prime Minister Chaim Ramon, who is the Prime Minister's chief architect on the program to divide the capital, has said that a special governmental committee should be set up for sovereignty over holy sites in the Old City, but that it is too early to work out details.

Olmert did not have the moral authority "to draft municipal bylaws..."

An Israeli Constitution

Touching on another controversial issue in his speech to the Knesset on Monday, Prime Minister Olmert called to create an Israeli constitution in advance of the country's 60th Independence Day celebrations next summer. While creating a constitution will be difficult, he said, "after 60 years, the time has come."

The Land of Israel Legal Forum criticized the Prime Minister's announcement, saying that Olmert did not have the moral authority "to draft municipal bylaws, much less a constitution." The creation of a document with moral force for the entire nation, said forum head Nachi Eyal, cannot be by "someone enveloped in current and future criminal investigations, and in damning reports by the attorney general...."