JERUSALEM — Israel's deputy prime minister said Tuesday that Israel should prepare to make concessions with a "grand one-sided move" if peace talks with the Palestinians should fail.

The minister, Ehud Olmert, has stirred fierce debate among Israelis and Palestinians with his recent pronouncements about the possibility of sweeping unilateral Israeli actions that would seek to impose a Mideast settlement if no peace agreement can be reached.

Olmert is considered a hawk. Yet most right-wing Israelis reject his calls for political and territorial concessions amid the Mideast violence.

Palestinians say they oppose Israeli moves that are not a product of negotiations between the two sides.

Still, Olmert is regarded as a close ally of Prime Minister Ariel Sharon, and his comments are generally seen as preparing the ground for moves that Sharon is contemplating.

"My preferred option is a political settlement, but we cannot wait for it indefinitely," Olmert told a national security conference in Herzliya, outside Tel Aviv.

"One must hope that the Palestinian government will succeed in gaining control of the state," he said on the first day of the Herzliya Conference. "But failing that, Israel must undertake an immediate grand one-sided move."

Sharon is to deliver a highly anticipated speech to wrap up the event Thursday evening. Reuters reported that Sharon has told his ministers that he will call in the speech for Israel to empty Jewish settlements in the Gaza Strip. That report could not be independently confirmed.

The Israeli moves Olmert spoke about could involve giving up some of the more isolated Israeli settlements in the West Bank, while keeping the larger ones and drawing Israel's borders without the consent of the Palestinians, according to Olmert and other Israeli officials.

With Mideast peace efforts stalled, Israeli troops remain in and around Palestinian cities in the West Bank. However, Israel has been taking small, limited steps to ease some restrictions on Palestinians, such as allowing more workers into Israel.

Israeli officials say they are prepared to continue with such steps while opening a dialogue with the Palestinian prime minister, Ahmed Qurei.

But if Qurei's government proves ineffective and peace negotiations stall in coming months, then Israel will consider calling off the discussions and taking the kind of unilateral steps that Olmert has suggested, the officials say.

The United States, the main Mideast peace broker, opposes unilateral moves and is trying to help restart the peace plan, known as the road map.

Israel's foreign minister, Silvan Shalom, said the government would not act without consulting closely with the United States. "If the road map cannot be implemented, all will be done in coordination with the United States," Shalom told Israel radio.

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In another development Tuesday, Palestinian leader Yasser Arafat said he hoped to attend Christmas services in the West Bank town of Bethlehem for the first time in three years.

But an Israeli official said there were no plans to lift the confinement of Arafat, who has rarely left his West Bank compound in Ramallah since December 2001.

"I believe Yasser Arafat will spend Christmas in the same place he spent last Christmas," said the Israeli official.

Arafat is a Muslim, but was a regular at the Christmas ceremonies in Bethlehem from 1995 through 2000.

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