RAMALLAH, West Bank, Jan 13 (Reuters) - Daniel Barenboim, the world renowned Israeli pianist and conductor, has taken Palestinian citizenship and said he believed his rare new status could serve a model for peace between the two peoples.

"It is a great honour to be offered a passport," he said late on Saturday after a Beethoven piano recital in Ramallah, the West Bank city where he has been active for some years in promoting contact between young Arab and Israeli musicians.

"I have also accepted it because I believe that the destinies of ... the Israeli people and the Palestinian people are inextricably linked," Barenboim said. "We are blessed -- or cursed -- to live with each other. And I prefer the first."

"The fact that an Israeli citizen can be awarded a Palestinian passport, can be a sign that it is actually possible."

Former Palestinian Information Minister Mustafa Barghouthi, who helped organise Saturday's concert, said the passport had been approved by the previous government of which he was a member and which was replaced in June. The passport had actually been issued about six weeks ago, he added.

Argentine-born Barenboim, 65, is a controversial figure in his adoptive homeland, both for his promotion of German music and vocal opposition to Israel's occupation of the West Bank.

Asked about U.S. President George W. Bush's remarks last week on a visit to the region that a peace could be signed this year, Barenboim warned of the danger of raising hopes too high.

"It would be absolutely horrible if now, with good intentions, expectations are raised which will not be able to be fulfilled," Barenboim said. "Then we will sink into an even greater depression."

Though he dismissed any wish to play a political role, the former music director of the Chicago Symphony Orchestra took a dig at Bush's strikingly forceful call in Jerusalem last week for Israel to end, in the president's own words, "the occupation".

"Now even not very intelligent people are saying that the occupation has to be stopped," Barenboim said.

Based in Berlin, he is closely identified with German music and in 2001 conducted an opera by 19th-century composer Richard Wagner in Jerusalem despite anger in some quarters at a performance of a work by a German accused of anti-Semitic views.

For the past decade, Barenboim has promoted Arab-Israeli cultural contacts, notably alongside the late Palestinian-American writer Edward Said. (Editing by Sami Aboudi)

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