Foreign Minister Shimon Peres said the decade-old Israeli-Palestinian peace process was flawed from the outset because it did not start by granting the Palestinians a state. 

Instead, the 1993 Oslo peace accords granted the Palestinians autonomy over the parts of the West Bank and Gaza, leaving them marooned in a destructive limbo under Israel's grip, the elder statesman said. 

"We thought that autonomy is basically, almost independence," Peres, one of the architects of the interim peace accords, told American Jewish leaders. 

"Today we discover that autonomy puts the Palestinians in a worse situation. We have to give them equal rights, equal recognition. We cannot run their lives, their economy," he said in a speech to 70 members of the Conference of Presidents of Major American Jewish Organizations. 

The nearly decade-long peace process has collapsed under the heavy toll of more than a year of escalating rage and bloodshed. The economies of Palestinian towns and cities have been damaged and many have been jobless for the duration of the fight, now moving into its 17th month. 

Rings of Israeli military checkpoints and barricades stretch around Palestinian cities, measures intended to thwart militant attacks but which Palestinians say add up to daily humiliation and punishment of ordinary people. 

All of it could have been avoided, Peres said, if the Palestinians had had a state from the beginning. 

"We cannot keep three and a half million Palestinians under siege without income, oppressed, poor, densely populated, near starvation," he said, adding that without a visible political horizon the Palestinians will not make peace with Israel. 

Peres and Palestinian Parliament Speaker Ahmed Qureia have been working on a peace plan in three stages — a cease-fire, followed by Israel's recognition of Palestinian statehood in undefined borders and negotiations on a final peace deal within a year. 

Israeli Prime Minister Ariel Sharon and Defense Minister Binyamin Ben-Eliezer have poured cold water on the plan, saying it is unrealistic.