Israeli vice premier offers settlers buyout

JERUSALEM (Reuters) - Israel's vice premier presented a proposal on Sunday to pay thousands of Jewish settlers to leave their homes in the West Bank but said a peace deal with the Palestinians was unlikely this year or in 2009.

Haim Ramon, a top deputy to Prime Minister Ehud Olmert and one of his closest confidants, said the government should offer each settler family living beyond the barrier Israel is building in the occupied territory some $300,000 to relocate.

"Greater Israel is a thing of the past," Olmert told his cabinet, which debated Ramon's proposal for the first time. He was referring to many settlers's hopes of retaining all of the West Bank, land Palestinians want for a state of their own.

Facing possible indictment in corruption probes, Olmert has promised to resign after his Kadima party holds an election on Wednesday to replace him. He could stay on as caretaker prime minister for weeks or months until a new government is formed.

Ramon has said his "evacuation-compensation" plan could help bolster U.S.-sponsored peace talks which Washington hopes can yield at least a framework agreement by the time President George W. Bush leaves the White House in January.

But at a news briefing after the cabinet session, Ramon echoed pessimistic forecasts by Palestinians and top Western diplomats who see little chance of a breakthrough on issues such as borders, the fate of Palestinian refugees and the status of Jerusalem.

"The way things are going at the moment, I'm not optimistic there can be a deal by the end of this year or even by the end of next year," said Ramon. "It could take five or 10 years."

TERRITORIAL COMPROMISE

Although no vote was held on the compensation package, the discussion marked an attempt by Olmert to prepare "the Israeli consciousness" for territorial compromise, a spokesman for the prime minister said.

Ramon presented a survey indicating that about 18 percent, or 11,000, of the 61,000 settlers who live east of the barrier -- land Israel is likely to hand over to the Palestinians -- would agree to leave immediately in return for a buyout.

Yonaton Behar, who lives in Har Bracha settlement east of the barrier, said he did not think Ramon's plan would have much of an impact.

"Ramon is talking about 11,000 (who agree to compensation), out of a couple of hundred thousand. That's minuscule, that's nothing," said Behar, 48, who is originally from the United States.

Some 500,000 Jews live among 2.5 million Palestinians on West Bank land captured by Israel in a 1967 war, including Arab East Jerusalem.

At the cabinet session, Olmert described as "intolerable" an attack by armed settlers on Saturday on the West Bank village of Asira al-Kabaliya, an assault launched after a Palestinian stabbed and slightly wounded a boy in a nearby settlement.

"In the State of Israel, there will be no pogroms against non-Jews," Olmert said.

The word "pogrom" has particular significance in Israel, where it is used mainly to describe extensive violence against Jews in Russia in the late 19th and early 20th centuries.

Three Palestinians were shot and wounded in the settlers' attack, medical officials said.

(Additional reporting by Adam Entous, Ari Rabinovitch and Allyn Fisher-Ilan, Editing by Mark Trevelyan)