Israel wants to deal with refugee issue up-front

By Adam Entous

JERUSALEM (Reuters) - Israel wants the divisive question of Palestinian refugees addressed early in talks with President Mahmoud Abbas and suggested movement on the issue could lead to a pledge to hand over more Israeli-held land.

In meetings over the last week with visiting U.S. and European officials, Foreign Minister Tzipi Livni and other Israeli leaders stressed the importance of addressing the refugee issue up-front, participants said on Thursday.

No issue, with the possible exception of Jerusalem, is as emotional and troubling for Palestinians and Israelis as the fate of Palestinian refugees at the core of the conflict.

"This is a killer for Abbas," one diplomat said of the refugee issue, adding that addressing it first could jeopardize talks over a U.S.-sponsored conference expected in November.

Israel wants any agreement of principles to reflect its position, backed by U.S. President George W. Bush, that refugees settle in a future state of Palestine, rather than in Israel.

Many Israelis fear that any mass return would threaten the Jewish character of the state carved out in 1948.

Without an early agreement in principle on refugees, Foreign Ministry spokesman Mark Regev said, "it will always remain a concern that the establishment of a Palestinian state has not ended the conflict and that there are more demands on Israel".

Diplomats said Israel wants talks on refugees to precede the other final status issues of borders and Jerusalem.