The Palestinians are ready to yield parts of the West Bank to Israel if compensated with an equal amount of Israeli territory, the lead Palestinian negotiator said in an interview yesterday.

Ahmed Qureia, a former prime minister who has dealt with five Israeli prime ministers during 14 years of failed peacemaking, is trying again with No. 6, Ehud Olmert.

And he's full of optimism, saying the U.S.-hosted Mideast conference in Annapolis, Md., tentatively set for Nov. 26, is a "very, very, very important opportunity." If it fails, he predicts Israelis and Palestinians might suffer more than in the blood-soaked years following the failed Camp David summit in 2000.

Qureia's boss is Palestinian President Mahmoud Abbas, leader of the Fatah faction that controls the West Bank but lost control of the Gaza Strip to the more militant Hamas in June. But there was hope on that front too, yesterday, as Hamas said it would hold reconciliation talks with Fatah and hinted it might be ready to give up control of Gaza.

"There is a serious movement in the realm of Palestinian dialogue and we have agreed to hold a dialogue with Fatah in one of the Arab capitals," said Ismail Haniyeh, Hamas prime minister, on a pro-Hamas website. "Our administration in Gaza is temporary."

In his modest office in a suburb of Fatah-controlled West Bank, Qureia, 71, says Israelis and Palestinians are slowly rebuilding trust, making compromise possible.

He heads a four-member team that has already met with Olmert's top aides trying to find enough common ground to draft a sentence or two on how to approach the many thorny issues next month.

For example, the Palestinians want the old Israeli-Palestinian frontier – before Israel captured the West Bank, Gaza and East Jerusalem in the 1967 Mideast War – to be the basis of border talks.

However, Israel will likely ask to keep chunks of East Jerusalem and the West Bank, in order to incorporate hundreds of thousands of settlers who have moved there since 1967. Palestinian leaders are increasingly promoting the idea of a swap, provided they get comparable land in Israel, even though it implies recognition that large Jewish settlements will remain in place.

In a joint declaration, it would be enough to declare the 1967 lines as the starting point, say the border is open to modifications, based on the principle that the Palestinians end up with as much land as they lost in 1967, Qureia said. The exact border would be worked out in negotiations following the Annapolis conference.

Part of the deal would likely be a land corridor linking the West Bank and Gaza, now separated by 40 kilometres of Israeli territory.