A top Israeli pledged to ease security restrictions and turn a crucial border post over to Egypt, and a key Palestinian agreed to prevent attacks on Israel, as both sides took halting steps toward Mideast peace under intense pressure from some of the world's most powerful people.

The vows Sunday were aimed at smoothing the way for Israel's planned withdrawal from the Gaza Strip (search) in August and were issued on the final day of the World Economic Forum (search), a glitzy gathering of world leaders pushing for government reform in the Middle East. Speakers included American first lady Laura Bush, the Jordanian king and queen, and the president of OPEC.

The day's most dramatic gesture came when Palestinian Civil Affairs Minister Mohammed Dahlan (search) and Israeli Vice Prime Minister Ehud Olmert (search) embraced and warmly shook hands, drawing murmured approval from the audience, which included top officials from the United Nations and World Bank. American actor Richard Gere was among the notables.

Dahlan and Olmert embraced as a public seal of their vows — Dahlan's pledge to halt attacks on Israel after it turns the Gaza Strip over to Palestinian control, Olmert's promise for "substantial, tangible changes" in Israel's economic blockade of Palestinians in the Gaza Strip.

But the public displays of goodwill changed to finger-pointing at a later session. Asked in an interview with The Associated Press whether he thought Dahlan's pledge was genuine, Olmert shrugged and said the Palestinian official had made two similar promises that proved ineffective.

And though Olmert pledged to allow Palestinians to revitalize their economy, he rejected in the interview the key points that the World Bank and others say are needed most.

His chief concession was that Israel would cede control of the Rafah crossing between Egypt and the Gaza Strip, handing it over to the Egyptians within a few months of Israel's evacuation of the volatile border area.

"We are negotiating with the Egyptians," Olmert said. "They will take it over."

While Dahlan welcomed Olmert's remarks as a "good step," Israeli officials in Jerusalem said no decision had been made on the border crossing.

And Olmert said Israel would deny a chief demand of the Palestinians — and of the World Bank — for the reopening of a Palestinian-owned airport in Gaza, even after the Israeli pullout.

Olmert said Israel wasn't prepared to allow Palestinians to oversee international flights into Gaza, saying they pose too big a risk for the import of missiles capable of hitting Tel Aviv and other nearby Israeli cities.

Gloomier still for the devastated Palestinian economy, Olmert confirmed that Israel would not heed international pleas to allow Palestinians to travel to jobs inside Israel. The Jewish state intends to fully bar Palestinians from working inside Israel by 2008.

Olmert said the ban on Palestinian employment inside Israel was part of a deliberate process to separate the two economies, which are eventually expected to be neighboring states. Israel doesn't want to depend on "foreign" workers, Olmert said. The World Bank estimates Palestinian unemployment at 30 percent.

Earlier Sunday, the World Bank's Nigel Roberts blamed Israel's restrictions on travel and trade for wrecking the Palestinian economy. He called on Olmert to allow Palestinians to use the now-closed roads and the Gaza airport and seaport and to allow more Palestinians to work inside Israel.

Olmert said Israel was only ready to "develop some platform for trade," but rejected most of the World Bank requests.

"We want them to get ready for the new realities, through jobs in the Palestinian Authority," Olmert said. "We kicked out all the Thais, the Chinese, the Filipinos out of Israel, so it's not something that discriminates Palestinians from other foreign workers. We don't want anyone."