With Prisoners' Release, Palestinians Demand Israel Withdraw to 1949 Lines, Renounce E. Jerusalem   Virtual Jerusalem  Prime Minister Binyamin Netanyahu lamented Monday, Oct. 28 that the release Tuesday night of 26 jailed Palestinians serving life sentences for murdering Israelis, the cause of widespread popular ire, was "one of the hardest decisions" he has ever made.  But he faces much harder decisions from the list of tough demands, debkafile's sources report were presented Israel by the Palestinians in ongoing US-sponsored negotiations, the prime minister has not made them known to the Israeli public. The new Palestinian terms are so harsh as to surely defy even US Secretary of State John Kerry's skills in bridging differences. The prime minister also kept mum about his offer to the Palestinians of financial compensation for land remaining under Israeli control - the first time any Israeli leader has put a price tag on disputed territory. The 16 Palestinian demands, which debkafile reveals exclusively for the first time below, make the release of convicted Palestinian murderers a dangerous exercise in futility, because each demand is enough to drive the negotiations into impasse, just as Mahmoud Abbas did two years ago. After seeing the Palestinian list, Netanyahu should have put the release of prisoners on hold until Abbas comes around to a rational perception of the negotiations as a give-and-take process for the object of reaching an agreement - not an opportunity for outrageous extortion. Israel's senior negotiator Justice Minister Tzipi Livni tried arguing that the Palestinians were just making an opening bid and they expected it to be driven down in the bargaining process. However, negotiations have been going on for three months and the process is into the fourth month of the nine-month period assigned up to deadline. Mahmoud Abbas, rather than seeking common ground, has used the time to raise his price for a deal to an exorbitant level, while keeping his hand firmly on the terrorist spigot. It is a matter of record that a large proportion of jailed terrorists have reverted to violence after they walked in the past through the exits of Israeli jails. First published list of Palestinian demands The United States and Israel must acknowledge that the Palestinian state is "under occupation." (This is the Palestinian response to Prime Minister Netanyahu's demand to recognize Israel as the Jews' national state.) Israeli must repeal legislation extending Israeli law to East Jerusalem The Palestinians will have full sovereignty over their air space. (This will bar Israeli air force flights over Judea and Samaria and the Gaza Strip). The Palestinians will have exclusive control of all border crossings to neighboring nations. i.e. Israel and Jordan. Israel's withdrawal to the pre-1967 boundaries is not enough. Its pull-back must go all the way to the 1949 armistice lines, additionally annexing to the Palestinian state broad strips of Israeli land that were demilitarized at that time. Among the areas which the Palestinians want to lay hands on are the Ayalon Valley, the Latrun enclave and the Armon Hantatiz district of Jerusalem between the Old City and West Jerusalem; the Huleh Lake Valley; the Golan slopes running down to the Sea of Galilee; and the Nitzana belt north of the Gaza Strip - plus one third of Dead Sea water and shore. (The Palestinians hope to grab substantial Israeli territory beyond the pre-1967 borders by invoking the long moribund 1949 accords.) Electromagnetic space (radio frequencies, satellite and other communications) will be under sole Palestinian control The Palestinians are ready to relinquish 1.9 percent of West Bank territory. All parts of East Jerusalem including the shrines sacred to Muslims, Christians and Jews will come under sole Palestinian authority against a pledge of freedom of worship. Israel and its armed forces will draw back from the Palestinian state over a three-year period. Six months after the drawdown is complete, the Palestinians will be willing to sign final peace treaties with the State of Israel. The US and Israel must accept the settlement of the Palestinian refugee problem as "a just and agreed solution." Every Palestinian refugee (as per the Palestinian Authority's definition of up to the fourth generation) will be free to choose between three options: settlement in Israel or the Palestinian state or staying at their present locations. Whichever option is chosen, the refugees will be entitled to appropriate restitution. Only when the refugee issue is finally resolved will the Palestinians agree to declare their dispute with Israel at an end. An international mechanism will be tasked with administering the disposition of the Palestinian refugees and their resettlement. It will be composed of Palestinian, Israeli, American, European, Canadian, Australian, Japanese and Arab League representatives. The Palestinian state will be authorized to sign treaties including military pacts without the intervention of a third party, such as Israel. All parts of the Palestinian state will be clear of Israeli civilian and military presence.