May 6 (Reuters) - U.S. President George W. Bush, on a visit to Israel next week to mark its 60th anniversary, will discuss U.S.-sponsored peace talks Israeli Prime Minister Ehud Olmert is holding with Palestinian President Mahmoud Abbas.
After five months of talks, what separates the two sides?
Ahead of Bush’s visit, Abbas deployed hundreds of his security forces to the northern West Bank city of Jenin and surrounding villages in a show that his government can exert control after a smaller deployment late last year in Nablus.
Israel has said no peace agreement will be implemented until the Palestinians dismantle militant groups. Palestinians say Israeli restrictions and raids have hindered those efforts.
Hamas Islamists, who seized control of the Gaza Strip in June after routing Abbas’s Fatah forces, oppose the talks. With U.S.-backing, Egypt has been trying to broker an unofficial ceasefire between Gaza militants and Israel.
Washington sees borders as the least problematic of the final-status issues and pushed for it to be tackled first. Israeli officials have reported "significant" progress on borders, but the Palestinians dispute that.
Olmert has privately expressed willingness to give up "90-something" percent of the West Bank and 100 percent of the Gaza Strip as part of a final peace deal, Western officials say.
Olmert is likely to offer at least 92 percent of the West Bank plus a land swap equivalent to 4-6 percent in exchange for Jewish settlement blocs that would be part of Israel, they say.
Israel wants to be compensated in territory for a 35-km (20-mile) land corridor connecting the West Bank to the Gaza Strip. It is unclear how much land that would entail.
Abbas has demanded the equivalent of 100 percent of the West Bank and Gaza Strip, a land area he says totals 6,205 sq. km. (2,396 sq. miles). That is the amount of Palestinian territory Abbas estimates Israel captured in the 1967 Middle East war.
Abbas has raised the possibility of amending the pre-1967 lines and may accept a 1.5-2 percent land swap provided the end result is a state on 6,205 sq. km, Palestinian officials say.
It is unclear how Israel and the Palestinians will handle the Jordan Valley — about 30 percent of West Bank land. Palestinian negotiators say they are prepared to allow international troops there but not Israeli forces.
There has been no sign of movement on Jerusalem.
Olmert says talks have yet to touch on the issue, though some Israeli officials and the Palestinians dispute that. Olmert fears tackling Jerusalem could make the ultra-Orthodox Shas party, a key coalition partner, bolt, triggering new elections.
Abbas wants Arab East Jerusalem as the capital of a future Palestinian state. Israel regards all of Jerusalem as its capital, but this is not recognised internationally.
One of the biggest sticking points is how to administer the Old City, site of Islam’s al-Aqsa mosque and Dome of the Rock, Judaism’s Western Wall as well as Christian holy sites.
Israeli Vice Premier Haim Ramon, a close Olmert confidant, has said the agreement being negotiated would not go into details like how the Old City would be administered.
In a proposal to end the conflict in December 2000, then-U.S. President Bill Clinton called for Palestinian sovereignty over the area where al-Aqsa and the Dome of the Rock stand. Israel would have sovereignty over the Western Wall.
There would be an international monitoring system.
Neither side is ready to compromise on Palestinian refugees for now. Olmert confidantes say Israel will not allow a formal "right of return" for millions of Palestinians to what is now the Jewish state. But they say a limited number of Palestinians could ask to settle in Israel on humanitarian grounds.
Israel wants Abbas to give up the "right of return" in exchange for Israeli concessions on Jerusalem and borders.
Abbas has pointed to language on the right of return in U.N. resolutions and an Arab League peace plan as possible models.
First launched in 2002, the Arab initiative calls on Israel to reach an "agreed and just" solution for Palestinian refugees based on U.N. Resolution 194, which calls for the return of refugees — and compensation for those who do not return. (Reporting by Adam Entous, Wafa Amr and Mohammed Assadi, editing by Sami Aboudi)