While under investigation over his alleged involvement in the Holyland affair, Former Prime Minster Ehud Olmert on Tuesday questioned the effectiveness of proximity talks with the Palestinians and said that "anything less than direct talks – is not as good."

During a speech at the Social Economic Forum named after Benny Gaon in Tel Aviv, Olmert said that "there was no need for a referee between us and the Palestinians.

"The proximity talks are not necessarily the best course of action; if we are not willing to make large concessions, we better not delude ourselves and the international community that we are on the way to a serious agreement."

The former prime minister noted that it was Israel's duty to maintain its security interests. "We must insist on a peace agreement that is based on (the 1967 borders), with a territorial exchange.

"The Arab neighborhoods (in Jerusalem) need to belong to the Palestinians," Olmert noted, while stressing that he found it difficult to make such comments– especially as the former mayor of the capital.

Olmert stressed that "not all territories can be evacuated," while adding that "there was no alternative solution; all sensitive areas in Jerusalem should be under international administration."

In his speech, the former mayor said that "in order to change reality, we need a leadership that will dare make decisions; a leadership that does not think about what the public wants, but what the state needs."