Speaking after talks with Israeli premier Benjamin Netanyahu in Jerusalem on Sunday, Steinmeier (L. above) told reporters that the creation of "a viable, peaceful Palestinian state" was a precondition for Israel to have "real and permanent security."

Efforts should be made in this direction "even if the situation currently seems particularly difficult," Steinmeier said, warning that "a new military escalation would be the worst development for both sides."

He said ways should be sought to revive Israeli-Palestinian peace negotiations following March 17 elections in Israel.

Peace negotiations between the Israelis and the Palestinians have stalled in the face of Palestinian demands that Israel stop its settlement building in East Jerusalem and the West Bank. Israel rejects any preconditions for talks.

'Right conditions needed'

In response, Netanyahu, who is leading the most right-wing government in Israel since the 1990s after being re-elected to a fourth term, said he continued to support - in principle - a two-state solution to the conflict with the Palestinians.

But he said it was necessary first to have the right conditions, "something which does not seem to be the case today."

Questioned as to what these conditions were, the Israeli premier said that the Palestinians had to recognize Israel as the "national state of the Jewish people," and to accept security measures aimed at preventing attacks on Israel from the Palestinian territories.

Bloody conflict

The German foreign minister was due to meet Palestinian Prime Minister Rami Hamdallah later on Sunday.

On Monday, he is scheduled to visit the Gaza Strip, which is still reeling in the aftermath of an Israeli offensive last summer that caused widespread carnage and damage in the coastal enclave.

Israel launched the two-month offensive in a bid to counter militant rocket fire into Israel from the territory.

The United Nations says around 2,200 Palestinians, mostly civilians, were killed in the conflict. Seventy-three people were killed on the Israeli side, 67 of them soldiers.

'Miraculous' anniversary

In Jerusalem, Steinmeier was also to be presented with an honorary doctorate by the Hebrew University.

His visit comes as Germany and Israel celebrate 50 years of diplomatic relations.

In talks with Israeli President Reuven Rivlin on Sunday, Steinmeier described relations between the two countries as "a miracle" and a "special treasure" in the light of a history overshadowed by the horrors of the Holocaust.

tj/jil (dpa, AFP)