Upcoming indirect peace talks between Israel and the Palestinians are in Israeli's interest and the country is ready to overcome the remaining obstacles, dpa quoted Israeli President Shimon Peres as saying on Sunday. "The gaps are small and we are interested in the establishment of an independent and stable Palestinian state alongside Israel," he said at a meeting in Jerusalem with visiting Danish Foreign Minister Lene Espersen. "Israel has adopted the principle of two states for two peoples," Peres, one of the architects of the Israeli-Palestinian interim peace accords in the 1990s, added. US Secretary of State Hillary Clinton announced Friday that the indirect, or "proximity" talks would begin next week, with the end goal of having direct negotiations between the sides. Indirect talks mean the parties negotiate through an intermediary. On Saturday, the Arab League gave its blessing to the indirect talks and US Middle East envoy George Mitchel is expected back in the region in the coming days, in order to mediate the negotiations. Israeli-Palestinian peace talks were suspended in late 2008, as Israel headed for new elections, and have not yet been resumed, despite efforts by the Obama administration. Palestinian President Mahmoud Abbas has demanded that Israel commit to a complete halt to construction in the West Bank and East Jerusalem as a condition for returning to the negotiating table. Although Israeli Prime Minister Benjamin Netanyahu imposed - and Palestinians rejected - a limited, partial 10-month freeze in the West Bank in late November, he refuses to halt construction in East Jerusalem, which Israel captured in the 1967 war and which Palestinians want as the capital of their future state. However, Israeli media report that it has accepted a de facto construction freeze in East Jerusalem, which it will not have to declare openly. Israeli officials refused to confirm the reports, but did say that an "understanding" was reached under US mediation, which would allow the "proximity talks" to finally begin in early May. -- SPA