Olmert, Abbas to try to revive stalled peace talks

JERUSALEM (Reuters) - Israeli Prime Minister Ehud Olmert and Palestinian President Mahmoud Abbas will meet on Thursday to try to overcome disputes over Jewish settlements that have paralyzed U.S.-backed peace talks.

The first two negotiating sessions between the Israeli and Palestinian teams ended in discord with the Palestinians protesting Israeli plans to build hundreds of new homes in an area near Jerusalem known to Israelis as Har Homa and to Palestinians as Abu Ghneim.

Thursday's meeting in Jerusalem between Olmert and Abbas will be their first since last month's U.S. peace conference in Annapolis, Maryland, in which the leaders set the goal of reaching a statehood agreement before U.S. President George W. Bush leaves office in January 2009.

It is unclear how Olmert and Abbas can bridge their differences and jumpstart talks ahead of Bush's visit to the region early next month. Both Olmert and Abbas have been weakened politically and questions remain about Bush's commitment in pressing for painful concessions from both sides.

The Palestinians have so far ruled out negotiating substantive issues such as borders, the future of Jerusalem and Palestinian refugees until Israel commits to halting all settlement activity, including so-called natural growth, as called for in the long-stalled "road map" peace plan.

Israel defines its road map obligations differently, arguing that construction within built-up areas of existing settlements is permissible as long as no new settlements are built and no additional Palestinian lands are confiscated.

Palestinians see the building of Har Homa as the last rampart in a wall of settlements encircling Arab East Jerusalem, cutting it off from Bethlehem and rest of the occupied West Bank. They say it is a strategic move by Israel to pre-empt any possibility of East Jerusalem becoming the Palestinian capital.

CRITICISM

Israel's Har Homa plan has also drawn rare criticism from the United States, Israel's key ally. Israeli construction at the same settlement derailed a previous round of talks in 1997.

Since Annapolis, Israel has also disclosed plans for new building within the Maale Adumim settlement which the Jewish state hopes to keep as part of any final peace deal.

Palestinian negotiator Saeb Erekat said Abbas would ask Olmert during their meeting to commit to a complete settlement freeze "so as to give the peace process a genuine chance".

Olmert spokesman Mark Regev said "both sides bring to the table issues of concern, and the goal is to find common ground".

Israel has responded to the protests over settlements by pressing the Palestinians to meet their road map commitments to rein in militants in the occupied West Bank and Hamas-controlled Gaza Strip as a condition for establishing a Palestinian state.

Hamas seized Gaza in June after routing Abbas's secular Fatah forces there.

It is unclear how any statehood agreement, if reached, would be implemented with the Palestinian territories divided between Abbas's Western-backed government in the West Bank and a rival Hamas administration running Gaza.

Israel is expected to make some goodwill gestures to Abbas before Bush arrives in the region.

Officials said one option under discussion involved the removal of a few small Jewish outposts in the West Bank that were built without Israeli government authorization.

Israel is also considering easing criteria for freeing Palestinian prisoners, a move one Israeli official said could pave the way for the release of Palestinian uprising leader Marwan Barghouthi, a possible successor to Fatah leader Abbas.

Easing restrictions on releasing prisoners who Israel says have "blood on their hands", a reference to attacks against Israelis, was part of efforts to secure a swap deal with Hamas for captured Israeli soldier Gilad Shalit.

(Additional reporting by Mohammed Assadi in Ramallah; Editing by Alison Williams)