Prime Minister Ehud Olmert said on Tuesday that he and Palestinian President Mahmoud Abbas have reached "understandings and points of agreement" on key issues in U.S-backed peace talks but he gave no details.

"There has been significant progress, and understandings and points of agreement have been reached in important matters, but not on all the issues," Olmert said in a speech to visiting world leaders at the "Facing Tomorrow" presidential conference.

"The discussions we are holding with the Palestinian Authority are very serious and meaningful," he said.
Olmert also stated that, "the greatest challenge now before us in the State of Israel, according to which its future will be determined, is the challenge of setting the final borders of the state within the framework of a peace accord with its neighbor, which will be recognized by the entire international community."

The prime minister is currently embroiled in a new investigation into allegations of corruption , as a result of which senior Palestinian officials have cast doubt over his ability to reach a peace deal with the PA.

Palestinian officials said Tuesday that there are no such understandings. "We have had serious and in-depth negotiations with the Israeli side," said negotiator Saeb Erekat, "but gaps still exist in all issues. We hope to be able to break these gaps before the end of 2008."

In the address, Olmert reiterated his support for a two-state solution to the Israeli-Palestinian conflict: "As long as the State of Israel's borders are not formed in line with this principle, as long as the blurring and mixing between us and the Palestinians continues - we will not realize the vision of tomorrow."

Also Tuesday, U.S. Secretary of State Condoleezza Rice said it was a misperception that not that much is going on in the political negotiations.

Her language was tempered, however. "I'm also a big believer that nothing is really impossible," she said in an interview conducted Monday and aired Tuesday on CBS' The Early Show. "It might be improbable, but it's not impossible."

Peres: Mideast skies are clouded over by Iranian ambition
Earlier Tuesday, President Shimon Peres, who was hosting the Jerusalem event, said "the skies of the Middle East are clouded over with Iranian ambition."

In a speech launching the international event, Peres went on to say that "fanatic, religious ambition aimed at taking over the entire region, and terror, including Iranian terror, have no shape and no future."

"The Iranian threat is taking on two forms: it is destroying Lebanon, breaking apart its unity, destroying its welfare without contributing anything for the future, and in the Gaza Strip where a group of religious fanatics is preventing the establishment of a Palestinian state. If it weren?t for Hamas, there would have already been a Palestinian state founded on the principle of two states for two peoples. They [Iran] only bring destruction without any benefit whatsoever," the president continued.

"The past is indefensible," Peres went on to say, "the future will be built by peace, not by terror."

Author and Nobel Prize laureate Elie Wiesel, another speaker at the conference, branded Iranian President Mahmoud Ahmadinejad as "the number one Holocaust denier in the World. This man is being received in places in the world? it's a disgrace."

Addressing the presidents at the conference, Wiesel said: "Don't receive him if he wants to come? This man should be declared persona non grata in every civilized society."

Weisel also posed to the audience that if Israel could make peace with Germany, why can't it make peace with the Palestinians.

Meanwhile, after his earlier comments, Peres said that Israel could have achieved peace 60 years ago, sparing the lives of thousands.

"The future that we are trying to invite could have taken place 60 years ago," Peres declared in a short speech given in English. "We could have had two states for the two peoples if the UN resolution would have been accepted by all parties."

The president went on to say that "we could have had peace with Egypt and Jordan at the beginning of the road instead of in the middle of the lake. Thousands of lives of men, women and children would have been saved."

In regard to Jewish identity, Peres said "Jews who are religiously alone in the world and Israel, being the only Jewish state, asked themselves how to offer a proper future for a great religion and a small people. Replace apology for contribution, make anti-Semitism and insults a shame. How can a small state navigate in stormy oceans without losing hope?"

Addressing the 27 heads of state of the present and the past and the 3,500 guests that attended the conference, the president offered his gratitude, saying "I want to thank you, each of you and all of you, for being here tonight in Jerusalem. Your presence here is a call to millions of people not to give up."

"Your profound experience, ripe judgment, and individual wisdom will teach us to identify dangers and opportunities and watch hope the way you see a sunrise of hope for peace, for freedom, for a just society." he continued.

"In Jerusalem we learned to pray. Now let us now learn to act," Peres concluded.