In this story:

• Netanyahu: 'A chance for success'
• Israeli Cabinet OKs land-for-security deal
• Hard-liners issue new ultimatum to Netanyahu
• Related stories and sites

JERUSALEM (CNN) -- On the eve of his departure for a Mideast peace summit in Washington, Israeli Prime Minister Benjamin Netanyahu on Tuesday said that no progress will be made unless the Palestinian Authority acts immediately in capturing suspected militants who killed an Israeli earlier in the day.

The killing underscored the key issue of Thursday's summit: Netanyahu's condition that the Palestinians do more to prevent terror attacks against Israelis.

"Without fulfillment of all Palestinian security commitments, there will not be an agreement and in light of this gloomy reality there is no chance at this stage of signing an agreement," a statement from Netanyahu's office said.

A young Israeli man was killed, and another critically wounded, while they swam in a forest pool outside Jerusalem Tuesday. Israeli police believe they were ambushed by Palestinian militants using automatic weapons.

The statement from Netanyahu also said that if it is proved that the attackers took refuge in a Palestinian-controlled area, "it is incumbent on the Palestinian Authority to act immediately to capture them."

Palestinian officials, dampening expectations of a breakthrough at the summit, said they did not expect Netanyahu to work seriously for a deal if he continued to reject the idea of reciprocity on security matters.

"We have had many Palestinians killed in cold blood by Israelis, but this never prompted Netanyahu to react by demanding justice to the victims," said Palestinian negotiator Hassan Asfour.

Top Palestinian negotiator Saeb Erekat added, "Netanyahu, who created the term reciprocity, has to stop his tolerance to Israeli extremism and has to understand that violence and terror must be fought whether committed by Israelis or Palestinians."

Netanyahu: 'A chance for success'

Despite his tough comments, Netanyahu told reporters Tuesday evening he was still willing to negotiate with Palestinians on key issues.

"I think there is a chance for success (at the Washington summit) if the Palestinians -- and only if -- fulfill their responsibilities under the Oslo accords, chief of which is fighting terrorism," he said.

One Israeli was killed and another wounded in an attack outside Jerusalem

Netanyahu and U.S. Secretary of State Madeleine Albright spoke by telephone on Tuesday.

U.S. State Department spokesman James Rubin declined to comment directly on the statement from Netanyahu's office but said reaching a deal at the summit, to be hosted by U.S. President Bill Clinton, was "not a sure thing."

"Clearly there are a large number of hurdles that have to be overcome if we are going to get any agreement," Rubin said.

In Gaza earlier, Palestinian leader Yasser Arafat said there was still "a lot to be solved" before a deal could be sealed at the summit.

Arafat's spokesman Nabil Abu Radainah said the coming week could make or break the peace process after 19 months of deadlock.

Israeli Cabinet OKs land-for-security deal

Netanyahu has agreed in principle to hand over 13 percent of the West Bank to the Palestinians, in exchange for guarantees of security and other conditions.

Earlier on Tuesday, Netanyahu's Cabinet gave him the go-ahead to negotiate the land-for-security deal at the summit.

The Cabinet formulated a list of nine demands that the Palestinians must meet before a withdrawal from the West Bank can take place. They include cooperation on security, an end to public incitement, disarming militants and decreasing the size of the Palestinian police force.

The Cabinet also said the Palestinians must remove clauses from their charter calling for Israel's destruction, arrest and extradite suspects in terror attacks and fight against terrorism.

Hard-liners issue new ultimatum to Netanyahu

Hard-liners in Netanyahu's coalition issued a new ultimatum Tuesday, saying the premier will have to choose between staying in power and agreeing to a West Bank withdrawal in Washington.

Netanyahu said he would bring back any deal in Washington for parliamentary approval before a final signing. But Michael Kleiner, who represents a powerful 17-member right-wing block in Netanyahu's coalition, said any indication that Netanyahu would agree to a pullout could topple his government.

"To us, initialing is agreement, and that would be enough for us to bring down the government," Kleiner said.

Netanyahu appointed hawkish former Gen. Ariel Sharon as Israeli's foreign minister last week, in an attempt to ward off criticism from the ultra-nationalists in his government. Sharon will be a key figure in the negotiating team in Washington.

"What (Netanyahu) wants is an agreement now on the 13 percent (withdrawal) and then more or less to freeze the situation with 13 percent being the last Israeli concession to the Palestinians," said Leslie Susser, an Israel political analyst.

"The reason he's brought Sharon in is to make it very obvious to the right wing that that's what he wants to do," Susser said.

Correspondent Jerrold Kessel, The Associated Press and Reuters contributed to this report.