Olmert rejects return of any Palestinian refugees

JERUSALEM (Reuters) - Prime Minister Ehud Olmert has told Palestinian President Mahmoud Abbas that Israel will not allow the return of any Palestinian refugees as part of a future statehood deal, Olmert's office said on Thursday.

The rare official statement was issued in response to reports Olmert proposed absorbing 2,000 refugees per year for 10 years as part of an agreement to establish a Palestinian state in most of the occupied West Bank and all of the Gaza Strip.

"The prime minister never offered to absorb 20,000 refugees in Israel. The prime minister again reiterates that under any future agreement, there will not be any return of Palestinian refugees to Israel in any number," Olmert's office said.

Nabil Abu Rdainah, an aide to Palestinian President Mahmoud Abbas, said Olmert's stance on refugees was unacceptable.

Leaks on this and other aspects of peace talks, such as an Israeli proposal to postpone discussion on Jerusalem, were designed to convince the world that Palestinians would be to blame for any failure of negotiations, he told Reuters.

He said a final settlement must provide for a Palestinian state in all of the Gaza Strip and the West Bank, including Arab East Jerusalem, and a "just solution for the issue of refugees".

U.S.-sponsored peace talks between Olmert and Abbas, launched last November, have shown little outward sign of progress and have been marred from the start by violence and disputes over Israeli settlement building.

Dogged by a corruption scandal, Olmert announced on July 30 that he would resign as prime minister after his centrist Kadima party chooses a new leader in September, dealing what many see as a death-blow to the chances of a statehood deal this year.

The 20,000 figure was reported in Thursday's edition of Israel's left-leaning Haaretz newspaper and was confirmed by Israeli officials familiar with the matter before Olmert's office issued a statement denying it.

Some 700,000 people, half the Arab population of Palestine in May 1948, fled or were driven from their homes when Israel was created. Letting them and their families live in Israel now would undermine its nature as a Jewish state, Israel argues.

While Olmert has long rejected Palestinian insistence on the right of return for refugees and their descendants, who now number 4.5 million, Israeli officials had said that he was open to a very limited number returning as a "humanitarian" gesture.

The largest Palestinian refugee communities are in Jordan, Syria and Lebanon, as well as the West Bank and Gaza Strip.

(Reporting by Adam Entous and Avida Landau in Jerusalem; Writing by Adam Entous; Editing by Alistair Lyon and Michael Winfrey)