The Israeli Prime Minister Benjamin Netanyahu has said that an interim peace deal with the Palestinians is possible if the two sides cannot agree on major issues that have stymied peace efforts for years such as the status of Jerusalem and the right of return for Palestinians who left their homeland years ago. Mr. Netanyahu mentioned the possibility of a partial peace agreement for the first time on Monday in an interview with Israeli television. He cited the Jerusalem and refugees issues as two intractable disputes that stand in the way of a comprehensive permanent peace. The Palestinians' chief negotiator, Saeb Erekat, immediately rejected the idea that there can be any interim agreement or any solution that does not settle all core issues dividing the two sides. In particular, he said, decisions on the status of Jerusalem and refugees cannot be deferred. Palestinians seek a state in the West Bank and Gaza Strip with a capital in East Jerusalem which Israel has occupied for more than 40 years. Israel says Jerusalem must be its eternal, undivided capital. Years of peace talks have failed over the issue of Jerusalem and the fate of Palestinians displaced during the war that led to Israel's creation in 1949.