Netanyahu sets talks conditions on security

Abbas wants to discuss final borders at talks that resume tomorrow but renewed building in settlements could scuttle entire process.

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TEL AVIV // Two days after the US president called on Israel to extend a partial freeze on settlement construction, the Israeli prime minister, Benjamin Netanyahu, suggested yesterday that he may be prepared to compromise. Failure to continue the freeze threatens to derail resumption of the Middle East peace process. Revived talks are scheduled to begin tomorrow in Sharm el-Sheikh in Egypt and continue Wednesday in Jerusalem. Hillary Clinton, the US secretary of state, and George Mitchell, the US special envoy to the Middle East, are expected to take part in both sessions. Israel and the Palestinians have clashed in recent days over the topics that will play a central role in the negotiations, according to the Israeli newspaper Haaretz, which cited sources close to the talks.

Mr Netanyahu is demanding that the focus be on security arrangements in a future Palestinian state along with Palestinian recognition of Israel as a Jewish state. Palestinian leaders have repeatedly rejected that demand. Mahmoud Abbas, the president of the Palestinian Authority, which is conducting the talks with Israel, wants to first decide what the final borders of the future state will be before addressing other matters. The most immediate - and perhaps biggest - hurdle, however, remains Israel's decision about a partial halt to the construction of settlements in the occupied West Bank. The current 10-month moratorium that Israel imposed under US pressure expires at the end of this month. Barack Obama, the US president, on Friday urged Israel to continue the freeze. "What I've said to Prime Minister Netanyahu is that given, so far, the talks are moving forward in a constructive way, it makes sense to extend that moratorium," he said at a White House news conference.

The Israeli premier has ignored the issue publicly, but yesterday he told government ministers from his Likud Party in a closed-door meeting - the contents were leaked to the Israeli press - that there were "middle-ground options". He also spoke about the issue privately during the weekly meeting of his entire cabinet yesterday, telling his government, according to Haaretz: "I don't know if there will be a comprehensive freeze. But I also don't know if it is necessary to construct all of the 20,000 housing units waiting to be built. In any case, between everything and nothing there are a lot of possibilities." Some cabinet ministers have raised the option that Israel will renew construction only in the large settlements of the West Bank that it plans to keep under any peace agreement. The Palestinians have threatened to walk out of the negotiations should construction resume. Mr Netanyahu has trod carefully around the issue because he leads a coalition of predominantly hard-line, pro-settler parties that could topple his government. The pressure he is facing was clear yesterday when several senior officials said they oppose continuing the moratorium. Yuval Steinitz, the Israeli finance minister and a Likud member, said Israel will probably reject US pleas on the settlements. "President Obama has asked Israel to reconsider the freeze," he told an Israeli radio station. "We very much respect every idea and recommendation, but according to [last year's] cabinet decision, the freeze is over at the end of September." Eli Yishai, the interior minister and head of the ultra-religious Shas Party, which is part of the government, lambasted the Palestinians for using their demand for a settlement moratorium as an "excuse" to avoid advancing the peace process. He said he did not believe they "wanted diplomatic negotiations". The nascent peace talks are also facing a significant barrier from Mr Netanyahu's insistence that the Palestinians recognise Israel as a Jewish state. Yesterday, the premier attacked the Palestinian leadership for rejecting his demand. "To my regret ? I do not hear [the Palestinians] recognising two states for two peoples," he told his cabinet. "The foundation of the state of Israel is that it is the nation-state of the Jewish people. That is the real basis of the end of demands from the state of Israel and the end of the conflict between the two peoples." But Nabil Shaath, a Palestinian negotiator, said last week that accepting Israel's demand in effect meant that Israel's Arab minority, which accounts for about one-fifth of the country's population, will be deprived of their full citizenship rights. Furthermore, he said, Palestinian refugees who fled or were driven out during the 1948 war that created Israel will be denied the right of return to their former homes.