Israeli Prime Minister Ariel Sharon (search) told a U.N. summit on Thursday that the Palestinians are entitled to their own state, and his country has no desire to rule over them.

Sharon urged reconciliation and compromise with Palestinians to end their conflict. But he said that after Israel's withdrawal from the Gaza Strip, it was now up to the Palestinians to "prove their desire for peace" by putting a halt to terror and disarming militants.

"The Palestinians will always be our neighbors. We respect them and have no aspiration to rule over them," Sharon said, using unusually forceful language.

"They are also entitled to freedom, and to a national, sovereign existence in a state of their own," he said.

The General Assembly hall gave Sharon courteous applause when he finished his speech. Palestinian Foreign Minister Nasser Al-Kidwa (search) sat with his arms folded over his chest.

"We invite Sharon to resume negotiations including the issues of borders, refugees and Jerusalem, because peace is the way for Israel and Palestinians to live in dignity and security," Palestinian negotiator Saeb Erekat (search) said later Thursday.

The Palestinians are afraid Sharon won't take the Gaza withdrawal forward to broader peacemaking that would lead to a Palestinian state. They suspect he will instead use it to tighten Israel's grip on major West Bank settlement blocs.

In his speech, Sharon told the General Assembly that the Gaza pullout "opens a window of opportunity for advancing toward peace," on the basis of the long-stalled, U.S.-backed "road map" peace plan.

The plan foundered shortly after its introduction two years ago because both sides failed to comply with initial provisions: Israel continued to build settlements, and the Palestinians didn't disarm militant factions.

While adopting a conciliatory tone to the Palestinians, Sharon also drew red lines. He reasserted Israel's claims to disputed Jerusalem as its "eternal and united capital," and said Israel would finish building a contentious barrier that dips into the West Bank.

Palestinians see the eastern sector of Jerusalem as the capital of a future state, and the competing claims have made the city one of the most contentious issues of the Palestinian-Israeli conflict.