Chilean President Sebastian Pinera justified in Jerusalem Sunday his country's decision to recognize a Palestinian state, dpa reported.
"Chile has just recognized the Palestinian state, because we have always thought that Israel has the right to live within secure borders, internationally recognized borders," he said.
"But we also think that the Palestinian people have the right to have their own state, a free, democratic state," he told a news conference with Israeli Prime Minister Benjamin Netanyahu.
Israel is anticipating with concern a Palestinian move for statehood recognition despite the absence of peace negotiations. Acting Palestinian Prime Minister Salam Fayyad's two-year statehood building plan is due for completion in August.
Chile in January became one of the first of a series of South American states to recognize a state of Palestine within the 1967 borders. Israel captured the West Bank from Jordan and Gaza from Egypt in the Six-Day War of that year.
Israeli media have reported that Netanyahu, in a counter move, plans to present a peace initiative, in which he will propose an interim peace agreement that would see the establishment of a Palestinian state with provisional borders.
He would present the initiative either during an upcoming visit to Washington, in an address at the Capitol, and may speed up a trip to the US to later this month, Yediot Ahronot reported. Or he may present it a conference of Jewish groups in May.
The Palestinians however reject a state with provisional borders. Israeli newspapers were sceptical of Netanyahu's planned move, with some analysts saying his main goal was to increase support among the Israeli public by showing he was taking action amid the stalemate.
The Israeli-Palestinian peace process has been on ice for nearly all of Netanyahu's tenure.
But Netanyahu blamed Palestinian President Mahmoud Abbas.
"We've been calling for direct negotiations from day one of this government," he said.
"We are prepared to sit down and negotiate peace. And the Palestinians have found a variety of excuses not to do so."
Since Netanyahu took office in March 2009, a suspicious Abbas has demanded that Israel freeze all construction in the occupied West Bank and East Jerusalem as a precondition for direct talks with Israel's right-leaning government.
Piñera expressed hope for the revival of direct peace talks, which collapsed in September just three weeks after they were launched, as a partial, 10-month Israeli settlement freeze expired.
Piñera's visit to Israel was the first of a Chilean president in 40 years. On Saturday, he became the first Chilean president ever to visit the Palestinian areas, meeting Abbas in Ramallah.
Abbas said he would not accept a Palestinian state with provisional borders, an idea Netanyahu has recently been floating around as a way out the deadlock.
"We know that there was a past idea about a state with provisional borders and if this idea is proposed again, we will not accept it," the Palestinian president told reporters.
The time had come for an independent Palestinian state in the 1967 borders, which should become a permanent member of the United Nations by September, he said.