FACTBOX: Palestinians and Israelis give ground over document

(Reuters) - Palestinian and Israeli negotiators reached a written understanding on Tuesday that left both sides with less than they had sought in months of talks on a joint document for a U.S.-hosted peace conference.

Here's how each side fared on its key demands:

TIMELINES

Worked out only minutes before the start of the Annapolis, Maryland, meeting, the joint understanding as read out by U.S. President George W. Bush did not include a binding timeline long demanded by the Palestinians for statehood talks or for implementing any future agreement.

Instead, Palestinian President Mahmoud Abbas received a pledge from Israeli Prime Minister Ehud Olmert to "make every effort to conclude an agreement before the end of 2008."

JEWISH SETTLEMENTS

Despite assertions by the Palestinians that they would accept nothing less than a complete freeze in Jewish settlement activity, Olmert made no explicit public commitments.

In his speech to the conference, Olmert did not even mention the word "settlements," which Palestinians fear could destroy their chances of achieving a viable state.

Bush sought in his speech to say what Olmert would not by openly calling for ending settlement expansion.

JERUSALEM

Olmert beat back a Palestinian proposal to state in the document that East Jerusalem, captured by Israel in the 1967 Middle East war, would be the capital of a future Palestine.

Neither Bush nor the agreed paper made any mention of the future of East Jerusalem, though U.S. Secretary of State Condoleezza Rice listed Jerusalem as one of the core issues that both sides agreed to negotiate and resolve.

An explicit commitment now by Olmert to divide the holy city could break up his government.

NEGOTIATIONS

As proposed by the Palestinians, Olmert agreed to restart "working groups" to focus on the future of Jerusalem, borders and the fate of Palestinian refugees.

Abbas also got an Israeli commitment to begin the negotiating process within two weeks. A senior Israeli official said an Israeli-Palestinian "steering committee" was scheduled to hold its first session, and even gave the exact time -- 7 p.m. on December 12 in Jerusalem.

U.S. MONITORING

Citing concerns about sharing sensitive intelligence with the Palestinians, Israel blocked a proposal backed by Abbas to create a three-way security "committee" made up of the Israelis, the Palestinians and the United States.

Instead of a committee, both sides agreed to form a less formal "American, Palestinian and Israeli mechanism" that will be led by the United States.

Olmert agreed to give a U.S. general the power to judge whether Israel was freezing settlement activity and whether Palestinians were reining in militants as demanded by a long-stalled peace "road map."

JEWISH STATE

Olmert did not get a public Palestinian commitment to recognize Israel as a Jewish state, although Bush himself said "the United States will keep its commitment to the security of Israel as a Jewish state."

(Reporting by Adam Entous; Editing by Jeffrey Heller and Jackie Frank)