(Corrects quote in paragraph 3 to read to begin to realise rather than to realise) JERUSALEM, March 29 (Reuters) - Israeli Prime Minister Ehud Olmert said on Thursday there was a "revolutionary change" in the perception of Arab states towards Israel, Israel's YNet news website reported. YNet quoted Olmert as saying during a reception for his Kadima party faction: "There is a process here that the fighting in Lebanon (last year) has sharpened. "This process has brought the influential countries in the Arab world to begin to realise that Israel is not the biggest of all their troubles. This is a revolutionary change in their perception." His office was not immediately available for comment. Arab leaders earlier on Thursday in Riyadh endorsed a 5-year-old plan offering Israel normal ties with all Arab countries in return for its withdrawal from land seized in the 1967 Middle East war, the creation of a Palestinian state and a "just solution" for Palestinians displaced in 1948 with Israel's creation. Olmert described the Riyadh summit as "definitely a serious affair". "We do not delude ourselves. They want us to return to 1967 borders and they also want the right of return (for Palestinian refugees)," he was quoted as saying. Olmert said Israel was not surprised and expected this outcome. "The content is important, but it is also necessary to take into account the atmosphere, the positioning and direction (of the summit)," Olmert was quoted as saying. Olmert said Saudi Arabia was the country that would "eventually determine the Arabs' ability to reach a compromise with Israel". "There is here an important trend to relate to," he said. "The willingness of the Saudis to lead, to intervene is certainly interesting," he said. "We are not exaggerating this issue, but we are not dismissing it either." Earlier on Thursday an official in Olmert's office said the prime minister was studying the initiative. The United States said it viewed the outcome of the Arab summit as "very positive".
