Palestinian leader Yasser Arafat says peace with Israel remains his strategic option, but acknowledged mistakes have been made and major reforms are needed within the Palestinian Authority.
In a wide-ranging speech to Palestinian legislators in the West Bank city of Ramallah, Mr. Arafat said he will never abandon the option of peace with Israel, saying peace is in the common interest of both peoples.
The Palestinian leader says a "new formula" is needed for administering the Palestinian Authority and its security forces. Mr. Arafat says there is a need to "re-evaluate" those institutions and see where mistakes have been made. He also proposed "speedy preparations" for new elections, but did not set a date or provide details.
Mr. Arafat reiterated his call for an end to terrorist attacks against Israeli civilians, saying such operations do not serve the Palestinians' efforts toward statehood.
The Palestinian chairman says he is responsible for recent controversial deals ending Israel's siege of his headquarters in Ramallah and the Church of the Nativity in Bethlehem.
Many Palestinian and Arab leaders were critical of the agreements that sent 13 suspected Palestinian militants into exile in Europe and another six to a jail in Jericho, where they are being monitored by American and British wardens.
While Mr. Arafat admitted that mistakes have been made, he blamed Israel for the current conflict and during parts of his speech listed the damage caused during Israel's recent military offensive in the West Bank.
Mr. Arafat's speech came one day after Israeli Prime Minister Ariel Sharon said he will not resume peace talks with the Palestinians until there is major reform within the Palestinian Authority.
The Israeli leader said there cannot be any peace with what he called "a dictatorial, corrupt, tyrannical regime."
The United States and some Palestinian officials have also called for changes in the way Palestinian institutions operate.
Mr. Arafat made his address on the Wednesday Palestinians call Al Nakba, or the "great catastrophe." It marks the anniversary of the creation of Israel in 1948, during which hundreds of thousands of Palestinians became refugees during fighting between Israeli and Arab troops.