DAVOS, Jan 25: Israeli Foreign Minister Tzipi Livni said on Thursday that Israel's negotiations with Palestinians must stick to the vision of two states, side by side, as the only way to achieve peace in the region.

With Palestinian President Mahmoud Abbas watching,

Ms Livni told the annual meeting of the World Economic Forum that a Palestinian state is ‘not an illusion. It's there, it's achievable’.

Ms Livni urged the international community to support moderates in the Middle East and told Mr Abbas that ‘compromising with extremists will not promote anything’, a clear reference to Hamas and other militant groups.

Ms Livni spoke after Mr Abbas said peace between Israel and the Palestinian Territories was a concept whose time had come.

In remarks at the session that also featured Israeli Deputy Prime Minister Shimon Peres, he said that `peace is due and peace is forthcoming’.

Addressing a large crowd of political leaders, corporate bosses and others, Mr Abbas, speaking in Arabic, said that such an agreement would help strengthen the hands of moderates in the region and fight extremism of all stripes.

“You agree with me that the Middle East is now in dire need of peace,” he said, a reference to internal strife in Iraq, disagreement in Lebanon and elsewhere.

“The Palestinian-Israeli conflict is one of the most serious conflicts that require a solution. I am fully convinced that despite all the difficulties, an atmosphere conducive to the resumption of the peace process exists,” he said. “One that could lead to the establishment of a Palestinian state.”

As he spoke, Livni and Peres, seated on the stage near him, listened intently.

“We have the roadmap. A roadmap that includes the Arab initiative as well as President Bush's vision regarding the two-state solution,” Mr Abbas said. “What is required now, in all honesty, is for us to trace the beginning and the end of this peace process.—AP