DAVOS, Switzerland - Israel's foreign minister reached out to the Palestinian Authority's president in an emotional speech yesterday as she sat next to him at the World Economic Forum, saying that lasting peace was the dream of her government and her people and promising that a future Palestinian state was "not an illusion. It's there, it's achievable."

Tzipi Livni made clear, however, that her government would not compromise on its need for security and urged Palestinian Authority President Mahmoud Abbas not to compromise with extremists - a reference to the Hamas-led government's refusal to disavow its call for the destruction of Israel.

But Livni also made an impassioned plea for dialogue to begin, turning to face Abbas.

"I would like to negotiate, to speak, to meet, to talk," she said. On finding peace, she said: "There is nothing I want more. . . . This is part of our dream, this is part of our goal."

Abbas, for his part, said he was confident the peace process could be put on track. "We are ready as of now to start serious negotiations," he said during the public session. Afterward, the two warmly shook hands. They were to meet one-on-one today.

"We are creating this momentum . . . to put the train on the track and push it after that," Abbas told the Associated Press.

Abbas and Israeli Prime Minister Ehud Olmert are scheduled to hold three-way talks next month with Secretary of State Condoleezza Rice. A date and place have not been set.

The renewed efforts to restart peace talks have come amid widespread worry in recent weeks that unless progress is made, the Mideast in general would continue to deteriorate.

The pledges by Livni and Abbas followed pleas from Israeli and Palestinian youth, speaking via satellite from Jerusalem, Tel Aviv, and the West Bank city of Ramallah, that their leaders end the long conflict.

Many in the crowd of some of the world's most powerful business and political leaders seemed deeply moved by their words.

The tone was a sharp departure from the somber mood that took hold of Davos a year ago, when Israeli and Palestinian delegates were stunned by news of the Hamas victory in Palestinian elections. At the time, many predicted that 12 months of pain lay ahead for the region, and they were right.

The year brought violent Palestinian infighting and crippling Western sanctions targeted at Hamas that have hit ordinary Palestinians hard. Progress in talks between Israel and the Palestinians ground to a halt in the months after Hamas' victory.

Livni made clear that Hamas was still an obstacle.

"Compromising with extremists will not promote anything, but it can lead to further stagnation," she said, addressing Abbas.

Abbas said he was hopeful that talks with Hamas could result in a unity Palestinian government, despite violence between supporters of Hamas and his Fatah party. He reiterated that he would call early elections if the talks failed, but gave no specifics.

"We will fight for this [unity] government," he said. "Otherwise, if we totally fail, we will go to early elections."

Israeli President Is Granted a Leave

Moshe Katsav temporarily relinquished his powers

as Israel's president yesterday but defied demands from officials to quit outright and spare the nation more anguish over rape and sexual-assault allegations against him.

A parliamentary committee narrowly approved Katsav's request for a leave of absence of up to three months. Dozens of lawmakers, meanwhile, pressed ahead with a move to oust him.

The difference between suspension and outright removal from office is

that as long as Katsav is even technically president, he has immunity from prosecution.

Katsav, who insists he is

the innocent victim of a conspiracy, says he will not quit unless he is formally indicted. He will plead his case at a hearing before Attorney General Meni Mazuz, who has signaled his intent to put the 61-year-old president on trial.

- Associated Press