There has been a dramatic change in the Middle East of late, President Shimon Peres told Spain’s Congress of Delegates on Tuesday.

Events that no one could have anticipated have created a new agenda, he said.

Peres, in Madrid to celebrate the 25th anniversary of diplomatic ties with Spain, urged the Palestinians to return to the negotiating table immediately and to end the conflict.

“We saw in the past that the Palestinians suspected that no right-wing government of Israel would agree to a two-state solution, and Israel suspected that the Palestinians would insist on the right of return of 5 million refuges. We were both mistaken. Despite all speculations to the contrary, we overcame out differences with Egypt and Jordan,” he said.

Israel respects the efforts of the Palestinian leadership to build the infrastructure for an independent state, said Peres.

He cited the economic improvement in the West Bank, which enjoyed 7 percent growth in the past year. Gaza could also enjoy such growth, he said, if it rids itself of the misguided concept that it can achieve more through terrorism than through negotiations. The population of Gaza would do better for itself if it built houses instead of rockets, he advised.

Israel left Gaza willingly and has no intention of returning, said Peres. “Our great hope is that all mothers in the area will be able sleep without the sound of explosions.”

Peace negotiations are part of a process that starts with each side trying to attain the maximum, but ending with compromise, said Peres, who also urged Syria and Lebanon to negotiate peace with Israel without any preconditions.

Peace would bring an upsurge of tourism and global initiatives to the region, which would be beneficial to all.

“Don’t align with Iran,” he counseled the Syrians. “Iran does not seek peace.”

As for the Lebanese, he entreated them not to allow Hezbollah to turn the whole country into a battlefield.

“Fanatics have the power to destroy, but no message of hope,” said Peres.

At a working session with Prime Minister Jose Luis Zapatero, the Spanish leader told Peres his country is very interested in elevating hi-tech relations with Israel to reach the same level as political and security relations. Zapatero said Israeli hitech was in the top league.

“That’s all very well,” quipped Peres, “but we’re not Real Madrid.”

Happy to have the upper hand on the sports field, Zapatero responded: “No. In football, we’re unbeatable.”

At a luncheon hosted by King Juan Carlos in his honor, Peres, while lauding Spain’s democracy, did not refrain from discussing the country’s inglorious past.

For centuries, there were no Jews in Spain, he said. They went to other parts of Europe and Spaniards did not know Jews, yet fostered negative stereotyped images about Jews.

Much of that changed quarter of a century ago, recalled Peres, when he and then-prime minister Felipe González signed an agreement in The Hague on establishing diplomatic ties.

Just after arriving in Spain on Monday, Peres addressed the situation in Libya, saying he believed Muammar Gaddafi’s reign was approaching its end. It was an “irony of history” that Gaddafi wished in a speech a few weeks ago for “a Middle East without Israel,” but that it now looked like “there will be a Libya without Gaddafi,” Peres told members of the Jewish community in Madrid.