Israel renews call for peace talks with Lebanon

By Ori Lewis

JERUSALEM (Reuters) - Israel is interested in opening peace talks with Lebanon, a spokesman for Prime Minister Ehud Olmert said on Wednesday, echoing remarks the Israeli leader made behind closed doors to his security cabinet.

Lebanon has poured cold water on Israeli hopes that it would follow Syria in opening peace talks, saying Israel had to withdraw from what Beirut considers its occupied land, a sliver of disputed territory known as Shebaa Farms.

"Israel is interested in peace talks with Lebanon," Olmert's spokesman, Mark Regev, said.

"We are currently conducting negotiations with both the Palestinians and the Syrians, and there is no reason whatsoever why Israel should not be negotiating with the Lebanese," Regev said.

On Tuesday, an official quoted Olmert as telling the security cabinet: "Just as we started talks with Syria, I would hope it would be possible to start talks with Lebanon."

Separately, Lebanon's Hezbollah group and Israel, which fought a war in 2006, are putting the final touches on an agreement to exchange prisoners, a Lebanese political source said.

Seeking the return of the Golan Heights, territory Israel captured in the 1967 Middle East war, Syria has been conducting indirect negotiations with the Jewish state through Turkish mediators.

On another peace track, Olmert and Palestinian President Mahmoud Abbas are engaged in talks which the United States hopes can achieve a framework statehood deal by the time U.S. President George W. Bush leaves office in January.

Critics have accused Olmert of raising the profile of peace talks with Israel's enemies in order to distract attention from a corruption scandal which has led both his political allies and his foes to call for his resignation.

Olmert, who has denied any wrongdoing but pledged to quit if indicted in an ongoing criminal investigation of funds he received from a U.S. businessman, has said he would continue to pursue peace as long as he remained in office.

Israel has said it would be prepared to discuss the future of the Shebaa Farms only after Lebanon, Syria and the United Nations determine the ownership of the territory, an Israeli government source said.

Israel's position represents a slight change in its stance after previously saying that it would discuss the matter only with Syria.

On Monday, U.S. Secretary of State Condoleezza Rice said during a surprise visit to Lebanon that "the time has come to deal with the Shebaa Farms issue".

(Editing by Dominic Evans)