Palestinian President Mahmoud Abbas and visiting German Chancellor Angela Merkel discussed Sunday ways of launching a significant peace process between the Palestinians and Israel.

"The talks have focused on the best ways to launch a meaningful political process," Abbas told reporters in a joint news conference with Merkel in Ramallah.

He said that the time is suitable to resume peace talks in the wake of the recent Arab League summit that has revived a plan of establishing full ties between the Arab nations and Israel if the latter withdrew to the 1967 borders.

Abbas, meanwhile, noted that he briefed Merkel, whose country holds the rotating presidency of the European Union (EU), on the platform of the new Palestinian coalition government led by the Islamic Resistance Movement (Hamas).

"The government's platform reflects harmony with the demands that the international community called for achieving peace before lifting the siege on our people," said Abbas.

For her part, Merkel reiterated that the conditions of the Quartet, which comprises the EU, the United States, the United Nations and Russia, were binding, expressing regret that Hamas refused to comply with the Quartet-drawn conditions of recognizing Israel, renouncing violence and respecting previous peace deals.

"The EU has decided not to deal with the government," Merkel said, urging the Palestinian unity government to accept the Quartet's criteria in order to achieve full mutual cooperation.

In this regard, Abbas said the Palestinian National Authority (PNA) was committed to the Quartet's demands, looking for expanding ceasefire with Israel and releasing the captive soldier.

He, however, affirmed that Israel must stop its unilateral measures as well, including settlement expansions and the West Bank barrier. He also stressed that Israel must release Palestinian tax revenues.

"I hope the Israeli government will take helpful steps in accordance with the Arab peace initiative," said Abbas, reiterating his commitment to meet Israeli Prime Minister Ehud Olmert biweekly.

Olmert had slammed Abbas for not securing release of Gilad Shalit, the Israeli soldier who has been held captive in Gaza since June 25.

Abbas said Egypt has been mediating between Israel and the Palestinian militants who captured Shalit to free him, asserting his release must be part of a swap with the release of Palestinian prisoners in Israeli jails.

The captors, including Hamas, the Popular Resistance Committees (PRC) and the Islamic Army, have demanded to exchange the Israeli Corporal for about 1,000 Palestinian prisoners.

Israel has tightened security pressure in the Gaza Strip after Shalit's capture until November when it reached a ceasefire with the Palestinians.

Merkel revealed that an economic delegation will visit the Palestinian territories soon to look for investment chances and rebuild the collapsing Palestinian economy.

Abbas welcomed the move as a very important move.

Merkel's visit to the Palestinian territories for talks with Abbas was part of her Middle East tour.

Merkel arrived in Jerusalem on Saturday and held unofficial talks with Israeli Prime Minister Ehud Olmert after a stop in Jordan, where she met King Abdullah II. She will also visit Lebanon.