JERUSALEM - Israel would agree to creation of a Palestinian state if the Palestinians end their conflict with Israel, Prime Minister Ehud Barak said Thursday in his clearest reference yet to statehood.
Speaking after U.S. State Department mediator Dennis Ross arrived to evaluate whether the two sides are ready to move toward a peace accord despite the failure of last month's summit at Camp David, Barak warned Palestinian leader Yasser Arafat not to declare a state unilaterally.
The Palestinians want to set up a state in the West Bank and Gaza, with the traditionally Arab section of Jerusalem as its capital. Israel claims all of Jerusalem and wants to keep small parts of the West Bank where most Jewish settlers live.
Without mentioning borders or Jerusalem, Barak said he would agree to a state, an issue he has been ambiguous about in public until now.
''If the Palestinian leadership is prepared to confront the challenge of setting up a Palestinian state and solving the hardships of its people,'' said Barak, ''it must understand that a condition for that is ending the conflict with Israel.''
Barak's opponents charge he is offering the Palestinians broad concessions without demanding that they formally end the century-long conflict.
When they signed an interim agreement last September, the two sides set a target date of Sept. 13 for finishing a peace treaty. Arafat said that after that date, he would have the right to declare an independent state.
Speaking at a military college graduation ceremony, Barak warned that a unilateral declaration would provoke Israeli countermeasures and violence. ''This kind of deterioration would hurt, first and foremost, the Palestinians themselves,'' he said.
Barak did not specify the countermeasures, but Israeli officials have mentioned annexing parts of the West Bank, blocking entry of Palestinian workers and stopping trade, effectively choking the Palestinian economy.
Before meeting Ross, acting Israeli Foreign Minister Shlomo Ben-Ami said the question of another summit is not on the agenda now. ''We need to have some flexibility from the other side,'' he said.
Ross said his mission is to see ''whether or not the differences that exist can be overcome.'' Ross is to meet with Barak, but Arafat is abroad and is not expected back until next week.
The Israeli military expressed regret Thursday over the shooting death of an elderly Palestinian after he fired on Israeli soldiers Wednesday near Ramallah on the West Bank. He apparently thought they were burglars, and the soldiers thought they were under attack.
Arafat's security chief, Col. Jibril Rajoub, charged that the shooting was a crime that would hurt the peace process. ''I think it was a plot by the Israelis, who went in the dark of night, like thieves,'' he said
Israel and the Palestinians agreed on one issue Thursday - rejecting a State Department travel advisory warning American tourists that there is an ''increased possibility of terror attacks'' in Israel, the West Bank and Gaza Strip.
Danny Yatom, an adviser to Barak, said the announcement was unnecessary. Rajoub called it ''State Department propaganda.''
The Israeli army chief of staff, Lt. Gen. Shaul Mofaz, said his forces are always on alert for terror attacks, but there are no specific warnings now.