Mideast leaders line up to talks to Egypt’s Mubarak

CAIRO, July 18 (Reuters) – Egyptian President Hosni Mubarak hosted Palestinian and Israeli leaders and the U.S. peace envoy on Sunday, with a return to direct talks on the agenda but a breakthrough still seemingly distant.

While Egypt has long played a mediating role in Middle East politics, it is unusual for Cairo to host leaders on the same day, with shuttle diplomacy the preferred way of operating.

Still, none of the visitors saw the others, instead lining up back-to-back appointments with Mubarak, flanked by his foreign minister and top intelligence officer.

U.S. envoy George Mitchell, who is shuttling between the main players since a four-month window for indirect talks was agreed in May, held an hour-long meeting, then hurriedly left the presidency without briefing reporters.

Minutes after Mitchell’s convoy of tinted-window white cars rolled out, a convoy of similarly tinted black cars rolled in, escorting Palestinian President Mahmoud Abbas, who Mitchell met on Saturday in Ramallah.

Half an hour later Abbas was also gone, again without speaking to reporters. Israeli Prime Minister Benjamin Netanyahu arrived soon after Abbas’ departure.

State news agency MENA reported that Mubarak’s talks with all three men focused on “efforts to create the conditions necessary to advance the peace process and achieve a two-state solution”. It did not elaborate.

Speaking to reporters in Jerusalem earlier on Sunday, Netanyahu said: “I intend to discuss with President Mubarak the ways to speed up the process of entering direct negotiations with the Palestinians. I know that Egypt is as interested in advancing the diplomatic process as we are.”

Abbas told a Jordanian newspaper on Saturday Israel must agree to the idea a third party, possibly NATO, would secure the borders of a future Palestinian state and set other terms necessary for a return to direct talks. [ID:nLDE66G05M]

Netanyahu did not refer to those terms in his comments.

Israel and the United States are both pushing for a speedy return to direct talks, while the Palestinians say they have yet to receive a clear response from Israel on issues such as the size and shape of a future Palestinian state, security and Israeli settlement activities in the occupied West Bank.

Netanyahu in November ordered a partial freeze on settlements that will lapse in September.

The long-stalled indirect talks are about halfway through their agreed four-month duration. (Writing by Alastair Sharp)

Romania – Factors to Watch on July 13

July 13 (Reuters) – Here are news stories, press reports and events to watch which may affect Romanian financial markets on Tuesday.

PALESTINIAN PRESIDENT

Palestinian President Mahmoud Abbas ends a two-day official visit to Romania. He is expected to meet the speaker of parliament’s lower house.

CURRENT ACCOUNT

The central bank is expected to release current account data for May.

ROMANIA JUNE INFLATION FLAT AT 4.4 PCT AS EXPECTED

Romania’s annual inflation ROCPI=ECI held steady at 4.4 percent in June, in line with market expectations, data from the National Statistics Board showed on Monday. [ID:nBCR000049]

ROMANIA JAN-MAY TRADE DEFICIT SHRINKS 3.2 PCT Y/Y

Romania’s trade deficit ROTBAL=ECI shrank by 3.2 percent to 3.8 billion euros in January-May from the previous year, as exports’ growth rate outpaced that of imports, data showed on Monday. [ID:nBCR000050]

* For an instant view of analysts’ comments on the date releases, please see [ID:nLDE66B0DM].

ROMANIA SELLS LITTLE DEBT, EVEN AT HIGHER YIELD

Romania sold a fraction of what it had planned at a tender for one-year treasury bills on Monday, sticking to a self-imposed cut-off yield of 7 percent and heightening concerns over budget funding. [ID:nLDE66B1OG]

ROMANIA INDICTS CHAIRMAN OF BANCA TRANSILVANIA

Banca Transilvania (BATR.BX), Romania’s second-largest listed bank, has denied any knowledge of wrongdoing after the bank’s chairman was indicted by prosecutors on charges of money laundering and manipulating the market. [ID:nLDE66B0XV]

CZECH GROUP CEZ QUITS ROMANIA GAS-FIRED POWER PROJECT

Czech power group CEZ (CEZPsp.PR) has withdrawn from a partnership with Romania to build a new 400 megawatt gas-fired power plant citing unforseen costs, central Europe’s biggest utility said on Monday.

[ID:nLDE66B180]

CHINA THE ANSWER FOR BALKAN POWER REVAMP

Faced with dwindling interest from cash-strapped and cautious European investors, the Balkans’ creaking electricity infrastructure is happily soaking up more money from China. [ID:nLDE6660I5]

CARS

New car registrations dropped 42 percent on the year in January-June in Romania, to about 37,000 units.

Ziarul Financiar, page 12

LAYOFFS

Romania’s farm ministry plans to lay off about 3,500 people out of its total 13,300 employees, according to a government draft bill.

Ziarul Financiar, Page 2

NOTE- For a diary of forthcoming Romanian events, double

click [RO/DIARY], and a calendar of east European economic indicators, see [CONV/DIARY].

For other related news, double click on: ————————————————————— Romania Market Debt [RO-DBT] Romanian forex [RO-FRX] Romania Market Report [ROL/] Romanian money [RO-M] Emerging Market Debt [EMRG/DBT] Emerging forex [EMRG/FRX] All Emerging Markets news [EMRG] CEE indicators [CONV/DIARY] All East Europe News [EEU] E.Europe equities [.CEE] TOP NEWS — Emerging markets [TOP/EMRG] TOP NEWS — Convergence watch [TOP/EAST] Romanian indicators [RO/ECI] Main page of Reuters poll —————————————————————

Abbas says wants progress for direct Mideast talks

West Bank (Reuters) – Palestinian President Mahmoud Abbas said on Saturday he wanted progress in indirect peace talks with Israel before any move to face-to-face talks, which the United States wants the two sides to begin. U.S. President Barack Obama urged the two sides this week to resume direct talks by September. Israeli Prime Minister Benjamin Netanyahu, who met Obama in Washington on Tuesday, says he wants to negotiate directly with Abbas. But Abbas faces heavy domestic criticism over the failure of past negotiations and is wary of agreeing to more direct talks with Netanyahu’s right-wing government.

Speaking in Ramallah, Abbas reiterated the Palestinian demand for progress in the indirect “proximity” talks being mediated by U.S. Middle East peace envoy George Mitchell before any move to direct negotiations.

The indirect talks have been under way for two months.

“We said that if there is progress we will go to direct talks. If no progress happens, what is the benefit of negotiations that will be futile and useless,” he said.

He was speaking at a religious event to mark the Prophet Mohammad’s ascension to heaven.

Abbas said the Palestinians wanted the indirect talks to make progress on two issues: security arrangements and the borders of the state the Palestinians aim to found in the West Bank, the Gaza Strip and East Jerusalem.

Israel occupied the territories in the 1967 Middle East war.

“We are still hoping to realize success that will allow us to launch serious negotiations leading to peace,” said Abbas, who had a phone conversation with Obama on Friday.

The White House said the leaders “reviewed ways to advance to direct talks in the near term.”

Abbas said Israel must stop building Jewish settlements on occupied land in the West Bank and East Jerusalem and remove the enclaves under a final peace deal. He did not repeat his previous demand for a complete halt to settlement building as a condition for direct peace talks.

The Palestinians say the settlements, which pepper the West Bank, will make it impossible to establish a viable Palestinian state alongside Israel — the outcome envisaged by major powers.

Netanyahu signaled on Thursday he would not extend beyond September a 10-month moratorium on new home building in Jewish settlements in the West Bank. He said this week he was prepared to discuss “right away” the future of Jewish settlements if the Palestinians entered direct peace talks.

(Additional reporting by Ali Sawafta, editing by Tim Pearce)

Abbas says wants progress for direct Mideast talks

RAMALLAH, West Bank, July 10 (Reuters) – Palestinian President Mahmoud Abbas said on Saturday he wanted progress in indirect peace talks with Israel before any move to face-to-face talks, which the United States wants the two sides to begin. U.S. President Barack Obama urged the two sides this week to resume direct talks by September. Israeli Prime Minister Benjamin Netanyahu, who met Obama in Washington on Tuesday, says he wants to negotiate directly with Abbas. But Abbas faces heavy domestic criticism over the failure of past negotiations and is wary of agreeing to more direct talks with Netanyahu’s right-wing government.

Speaking in Ramallah, Abbas reiterated the Palestinian demand for progress in the indirect “proximity” talks being mediated by U.S. Middle East peace envoy George Mitchell before any move to direct negotiations.

The indirect talks have been under way for two months.

“We said that if there is progress we will go to direct talks. If no progress happens, what is the benefit of negotiations that will be futile and useless,” he said.

He was speaking at a religious event to mark the Prophet Mohammad’s ascension to heaven.

Abbas said the Palestinians wanted the indirect talks to make progress on two issues: security arrangements and the borders of the state the Palestinians aim to found in the West Bank, the Gaza Strip and East Jerusalem.

Israel occupied the territories in the 1967 Middle East war.

“We are still hoping to realise success that will allow us to launch serious negotiations leading to peace,” said Abbas, who had a phone conversation with Obama on Friday.

The White House said the leaders “reviewed ways to advance to direct talks in the near term”.

Abbas said Israel must stop building Jewish settlements on occupied land in the West Bank and East Jerusalem and remove the enclaves under a final peace deal. He did not repeat his previous demand for a complete halt to settlement building as a condition for direct peace talks.

The Palestinians say the settlements, which pepper the West Bank, will make it impossible to establish a viable Palestinian state alongside Israel — the outcome envisaged by major powers.

Netanyahu signalled on Thursday he would not extend beyond September a 10-month moratorium on new home building in Jewish settlements in the West Bank. He said this week he was prepared to discuss “right away” the future of Jewish settlements if the Palestinians entered direct peace talks. (Additional reporting by Ali Sawafta, editing by Tim Pearce)

Arab League chief visits Gaza Strip

(Reuters) – Arab League chief Amr Moussa visited the Gaza Strip on Sunday, the highest Arab official to do so since its seizure by Hamas Islamists in 2007, and called for an end to Israel’s blockade of the Palestinian territory.

World

Moussa crossed into the enclave from Egypt, two weeks after Israel’s deadly interception of a Gaza aid flotilla.

“This blockade…must be lifted and must be broken and the Arab League decision is very clear in this regard,” Moussa said.

Egypt had kept its Gaza border largely closed, bolstering Israel’s embargo, since Hamas, which won a 2006 election, seized sole control of the Gaza Strip in a war with Palestinian President Mahmoud Abbas’s Fatah faction three years ago.

But Cairo reopened its Rafah crossing with the enclave after Israeli marines killed nine pro-Palestinian Turkish activists in a May 31 raid on a Turkish-flagged aid vessel where passengers with metal rods and knives confronted the boarding party.

Palestinian and Arab League officials said Moussa’s visit was also aimed at giving momentum to reconciliation talks between Hamas and Fatah that Egypt has sponsored but which have failed to bridge deep mistrust between the two rivals.

In an apparent bid to avoid any impression of Arab League recognition of Hamas’s Gaza takeover, Moussa met Ismail Haniyeh, head of the Hamas government, in his home rather than in his office.

“We see this visit as a practical step along the way toward breaking the siege,” Haniyeh, with Moussa at his side, told reporters after their hour-long meeting.

But Senior Fatah leader Ashraf Goma said Moussa did not hear anything new from the various political factions and, therefore, ” the visit showed the gap remained wide and reconciliation was yet a far reaching goal.”

Goma said Hamas’s belief it could gain politically from the aftermath of the deadly Israeli raid on the Flotilla made it less willing to reconcile.

BLOCKADE DISCUSSIONS

Israeli Prime Minister Benjamin Netanyahu held talks on Friday with Middle East envoy Tony Blair on the blockade.

Echoing an Israeli statement after that meeting, Netanyahu told reporters on Sunday Israel would continue discussions with the international community to prevent weapons and military equipment from reaching Gaza and to allow in humanitarian aid, an apparent signal it was open to revising blockade procedures.

Amid an international outcry over the bloodshed in the flotilla raid, Israel has faced mounting pressure to ease or lift a blockade critics have described as collective punishment.

Speaking at a news conference as he concluded a day-long visit, Moussa voiced satire at Israel’s “trivial” ease up of the blockade.

“Taking Mayonnaise and Tomatoe salad off the ban list is not a relaxation of the siege. It is a trivial thing that makes someone laughs,” Moussa said.

Meeting on Sunday with members of his Likud party, Netanyahu said a retired Israeli Supreme Court justice, Jacob Turkel, would head a committee that Israel intends to establish to investigate the raid on the flotilla, officials said.

Pending the outcome of consultations with the United States, Israel has not made any formal announcement of the composition of the committee, which Israeli officials said would likely include foreign observers.

Washington has backed a U.N. Security Council statement that called for a “prompt, impartial, credible and transparent investigation, conforming to international standards” into the Israeli naval interception.

The White House has said it is open to different ways of ensuring the credibility of an Israeli-led investigation, including international participation.

Israel has rejected any external, international board of inquiry, saying it had a right to launch a probe on its own.

(Editing by Elizabeth Fullerton)

Arab League chief visits Gaza Strip

GAZA, June 13 (Reuters) – Arab League chief Amr Moussa visited the Gaza Strip on Sunday, the highest Arab official to do so since its seizure by Hamas Islamists in 2007, and called for an end to Israel’s blockade of the Palestinian territory.

Moussa crossed into the enclave from Egypt, two weeks after Israel’s deadly interception of a Gaza aid flotilla.

“This blockade…must be lifted and must be broken and the Arab League decision is very clear in this regard,” Moussa said.

Egypt had kept its Gaza border largely closed, bolstering Israel’s embargo, since Hamas, which won a 2006 election, seized sole control of the Gaza Strip in a war with Palestinian President Mahmoud Abbas’s Fatah faction three years ago.

But Cairo reopened its Rafah crossing with the enclave after Israeli marines killed nine pro-Palestinian Turkish activists in a May 31 raid on a Turkish-flagged aid vessel where passengers with metal rods and knives confronted the boarding party.

Palestinian and Arab League officials said Moussa’s visit was also aimed at giving momentum to reconciliation talks between Hamas and Fatah that Egypt has sponsored but which have failed to bridge deep mistrust between the two rivals.

In an apparent bid to avoid any impression of Arab League recognition of Hamas’s Gaza takeover, Moussa met Ismail Haniyeh, head of the Hamas government, in his home rather than in his office.

“We see this visit as a practical step along the way toward breaking the siege,” Haniyeh, with Moussa at his side, told reporters after their hour-long meeting.

But Senior Fatah leader Ashraf Goma said Moussa did not hear anything new from the various political factions and, therefore, ” the visit showed the gap remained wide and reconciliation was yet a far reaching goal.”

Goma said Hamas’s belief it could gain politically from the aftermath of the deadly Israeli raid on the Flotilla made it less willing to reconcile.

BLOCKADE DISCUSSIONS

Israeli Prime Minister Benjamin Netanyahu held talks on Friday with Middle East envoy Tony Blair on the blockade.

Echoing an Israeli statement after that meeting, Netanyahu told reporters on Sunday Israel would continue discussions with the international community to prevent weapons and military equipment from reaching Gaza and to allow in humanitarian aid, an apparent signal it was open to revising blockade procedures.

Amid an international outcry over the bloodshed in the flotilla raid, Israel has faced mounting pressure to ease or lift a blockade critics have described as collective punishment.

Speaking at a news conference as he concluded a day-long visit, Moussa voiced satire at Israel’s “trivial” ease up of the blockade.

“Taking Mayonnaise and Tomatoe salad off the ban list is not a relaxation of the siege. It is a trival thing that makes someone laughs,” Moussa said.

Meeting on Sunday with members of his Likud party, Netanyahu said a retired Israeli Supreme Court justice, Jacob Turkel, would head a committee that Israel intends to establish to investigate the raid on the flotilla, officials said.

Pending the outcome of consultations with the United States, Israel has not made any formal announcement of the composition of the committee, which Israeli officials said would likely include foreign observers.

Washington has backed a U.N. Security Council statement that called for a “prompt, impartial, credible and transparent investigation, conforming to international standards” into the Israeli naval interception.

The White House has said it is open to different ways of ensuring the credibility of an Israeli-led investigation, including international participation.

Israel has rejected any external, international board of inquiry, saying it had a right to launch a probe on its own. (Editing by Elizabeth Fullerton)

Arab League chief visits Gaza Strip

GAZA, June 13 (Reuters) – Arab League chief Amr Moussa visited the Gaza Strip on Sunday, the highest Arab official to do so since its seizure by Hamas Islamists in 2007, and called for an end to Israel’s blockade of the Palestinian territory.

Moussa crossed into the enclave from Egypt, two weeks after Israel’s deadly interception of a Gaza aid flotilla.

“This blockade…must be lifted and must be broken and the Arab League decision is very clear in this regard,” Moussa said.

Egypt had kept its border with Gaza largely closed, bolstering Israel’s embargo, since Hamas’s war with Palestinian President Mahmoud Abbas’s Fatah faction three years ago.

But Cairo reopened its Rafah crossing with the territory after Israeli marines killed nine pro-Palestinian Turkish activists during violent confrontations on a Turkish-flagged vessel in the aid convoy on May 31.

Palestinian and Arab League officials said Moussa’s visit was also aimed at giving momentum to reconciliation talks between Hamas and Fatah that Egypt has sponsored but which have failed to bridge deep mistrust between the two rivals.

In what appeared to be a bid to avoid any impression of Arab League recognition of Hamas’s Gaza takeover, Moussa planned to meet Ismail Haniyeh, head of the Hamas government, in his home rather than in his office, officials said.

At a joint news conference with Moussa, Hamas Health Minister Basim Naeem said the visit indicated that “the boycott between Gaza and the Arab nation was broken”.

Naeen said Hamas also hoped the trip would “be the start of a practical plan to lift the (Israeli) blockade of Gaza once and for all, in a complete and comprehensive way”.

On Friday, Israel said it wanted to enlist global support to improve the flow of civilian goods to the Gaza Strip, while seeing to it that weapons did not reach the territory.

Amid an international outcry over the bloodshed in the flotilla raid, Israel faced mounting pressure to ease or lift a blockade that critics have described as collective punishment. (Editing by Diana Abdallah)

Israel eases Gaza embargo to allow snack food in

(Reuters) – Israel is easing its Gaza embargo to allow snack food and drinks into the Palestinian enclave, Palestinian officials said Wednesday, following an international outcry over Israel’s raid on an aid flotilla.

World

Hamas, the Islamist group that rules the Gaza Strip, said the territory needs cement, banned by Israel and essential for reconstruction after a December 2008-January 2009 war, not soft drinks.

An Israeli official said the new product list, announced hours before U.S. President Barack Obama hosted Palestinian President Mahmoud Abbas in Washington, was unrelated to Israel’s May 31 takeover of the convoy that challenged its Gaza blockade.

The talks between Obama and Abbas were expected to focus on ways to ease the embargo, which has drawn mounting international criticism since Israeli commandos, who met violent resistance on a Turkish-flagged ship, killed nine pro-Palestinian activists.

In joint remarks, Obama said the situation in Gaza was unsustainable and Abbas repeated his call to end the blockade.

Obama said the United States was providing $400 million in new aid for the Palestinians.

The Palestinian officials, based in the West Bank, said that as of next week, Israel will allow a wider variety of food, such as potato crisps, biscuits, canned fruit and packaged humous, as well as soft drinks and juice, into the Gaza Strip.

“They will send the first course. We are waiting for the main course,” Palestinian Economy Minister Hassan Abu Libdeh said in Ramallah. “We are waiting for this unjust siege to end.”

Israel says its blockade of Gaza is necessary to choke off weapons supplies to Hamas, which is opposed to Abbas’s peace efforts with the Jewish state.

U.S. Defense Secretary Robert Gates, asked Wednesday about Israel’s policy, said Hamas has used humanitarian donations to strengthen its military capabilities in Gaza.

“Construction materials haven’t gone for housing, they’ve gone for bunkers,” Gates said on the program Frost Over the World to be broadcast on Al Jazeera’s English-language channel.

Hamas played down the impact of the new Israeli product list.

“We have three factories that make carbonated drinks. They say they want to allow in potato chips, but we have factories that produce more than enough to meet Gaza’s needs,” said Ziyad al-Zaza, economic and trade minister in Hamas’s Gaza-based government.

“We are looking for a true, real lifting of the blockade … the import of raw materials for industry and construction materials for the reconstruction of Gaza,” he said.

The United Nations says the Israeli blockade has caused a humanitarian crisis in Gaza, an allegation Israel denies.

CEMENT BAN

Israel’s ban on cement imports into the territory has limited efforts to rebuild homes and infrastructure destroyed or damaged in a three-week war it launched in December 2008 with the stated aim of curbing cross-border rocket fire.

Israeli officials have said Hamas could use cement to build bunkers and other military installations.

Asked about the new list of Israeli-approved products, the Israeli government official said: “Over the last six months, Israel has increased the volume of goods going into Gaza and their variety. That policy is continuing.”

A variety of goods comes into the Gaza Strip from neighboring Egypt via smuggling tunnels. Egypt, which largely closed its Gaza border after the Hamas takeover, reopened the frontier indefinitely following the Israeli naval raid.

Commenting on the blockade, an Israeli security source said Israel aimed to remove all restrictions on imported food items for Gaza within a few weeks and noted that jam and several other products were approved recently.

“This has nothing to do with the flotilla,” the source said, making no mention of whether Israel might expand the list to include reconstruction materials.

Israeli authorities said that last week, Israel transferred 12,413 tons of humanitarian aid through Gaza border crossings.

The shipments included 994,000 liters of fuel for Gaza’s power station, 748 tons of cooking gas and eight truckloads of medicine and medical equipment, according to an Israeli list.

(Writing by Jeffrey Heller in Jerusalem, Additional reporting Mohammed Assadi in Ramallah and Allyn Fisher-Ilan in Jerusalem)

Israel eases Gaza embargo, allows snack food in

GAZA, June 9 (Reuters) – Israel is easing its Gaza embargo to allow snack food and drinks into the Palestinian enclave, Palestinian officials said on Wednesday, following an international outcry over Israel’s raid on an aid flotilla.

Hamas, the Islamist group that rules the Gaza Strip, said the territory needs cement, banned by Israel and essential for reconstruction after a December 2008-January 2009 war, not soft drinks.

An Israeli official said the new product list, announced hours before U.S. President Barack Obama hosted Palestinian President Mahmoud Abbas in Washington, was unrelated to Israel’s May 31 takeover of the convoy that challenged its Gaza blockade.

The talks between Obama and Abbas were expected to focus on ways to ease the embargo, which has drawn mounting international criticism since Israeli commandos, who met violent resistance on a Turkish-flagged ship, killed nine pro-Palestinian activists.

In joint remarks, Obama said the situation in Gaza was unsustainable and Abbas repeated his call to end the blockade.

Obama said the United States was providing $400 million in new aid for the Palestinians.

The Palestinian officials, based in the West Bank, said that as of next week, Israel will allow a wider variety of food, such as potato crisps, biscuits, canned fruit and packaged humous, as well as soft drinks and juice, into the Gaza Strip.

“They will send the first course. We are waiting for the main course,” Palestinian Economy Minister Hassan Abu Libdeh said in Ramallah. “We are waiting for this unjust siege to end.”

Israel says its blockade of Gaza is necessary to choke off weapons supplies to Hamas, which is opposed to Abbas’s peace efforts with the Jewish state.

U.S. Defense Secretary Robert Gates, asked on Wednesday about Israel’s policy, said Hamas has used humanitarian donations to strengthen its military capabilities in Gaza.

“Construction materials haven’t gone for housing, they’ve gone for bunkers,” Gates said on the programme Frost Over the World to be broadcast on Al Jazeera’s English-language channel.

Hamas played down the impact of the new Israeli product list.

“We have three factories that make carbonated drinks. They say they want to allow in potato chips, but we have factories that produce more than enough to meet Gaza’s needs,” said Ziyad al-Zaza, economic and trade minister in Hamas’s Gaza-based government.

“We are looking for a true, real lifting of the blockade … the import of raw materials for industry and construction materials for the reconstruction of Gaza,” he said.

The United Nations says the Israeli blockade has caused a humanitarian crisis in Gaza, an allegation Israel denies.

CEMENT BAN

Israel’s ban on cement imports into the territory has limited efforts to rebuild homes and infrastructure destroyed or damaged in a three-week war it launched in December 2008 with the stated aim of curbing cross-border rocket fire.

Israeli officials have said Hamas could use cement to build bunkers and other military installations.

Asked about the new list of Israeli-approved products, the Israeli government official said: “Over the last six months, Israel has increased the volume of goods going into Gaza and their variety. That policy is continuing.”

A variety of goods comes into the Gaza Strip from neighbouring Egypt via smuggling tunnels. Egypt, which largely closed its Gaza border after the Hamas takeover, reopened the frontier indefinitely following the Israeli naval raid.

Commenting on the blockade, an Israeli security source said Israel aimed to remove all restrictions on imported food items for Gaza within a few weeks and noted that jam and several other products were approved recently.

“This has nothing to do with the flotilla,” the source said, making no mention of whether Israel might expand the list to include reconstruction materials.

Israeli authorities said that last week, Israel transferred 12,413 tonnes of humanitarian aid through Gaza border crossings.

The shipments included 994,000 litres of fuel for Gaza’s power station, 748 tonnes of cooking gas and eight truckloads of medicine and medical equipment, according to an Israeli list. (Writing by Jeffrey Heller in Jerusalem, Additional reporting Mohammed Assadi in Ramallah and Allyn Fisher-Ilan in Jerusalem)

International reaction to flotilla intervention

Here is some international reaction to the incident:

PALESTINIAN PRESIDENT MAHMOUD ABBAS:

– “What Israel has committed on board the Freedom Flotilla was a massacre.”

He declared three days of official mourning for the dead.

TURKISH PRESIDENT ABDULLAH GUL:

– Gul said in a statement that Ankara is demanding an inquiry into the violent interdiction of the Turkey-backed convoy and the punishment of the culprits.

– Turkey said on Monday it had called for an emergency meeting of the U.N. Security Council.

ARAB LEAGUE CHIEF AMR MOUSSA:

– Amr Moussa called on Monday for an emergency meeting to discuss what the body that groups 22 Arab states described as Israel’s “terrorist act.”

“The Arab League strongly condemns this terrorist act.”

IRANIAN PRESIDENT MAHMOUD AHMADINEJAD:

– “The inhuman acts of the Zionist regime against Palestinians and preventing humanitarian aid to the Gaza people does not show the strength of the Zionist regime but shows its weakness,” Ahmadinejad told state broadcaster IRIB. “All these acts indicate the end of the heinous and fake regime and will bring it closer to the end of its existence.”

FRENCH PRESIDENT NICOLAS SARKOZY:

– “The President of the Republic expresses his profound emotion in the face of the tragic consequences of the Israeli military operation,” Sarkozy’s office said. “He condemns the disproportionate use of force and addresses his condolences to the families of the victims,” it said.

ITALIAN FOREIGN MINISTER FRANCO FRATTINI:

– “I deplore in the strongest terms the killing of civilians. This is certainly a grave act.”

BRITISH FOREIGN SECRETARY WILLIAM HAGUE:

“I deplore the loss of life during the interception of the Gaza Flotilla…We have consistently advised against attempting to access Gaza in this way, because of the risks involved. But at the same time, there is a clear need for Israel to act with restraint and in line with international obligations…”

GERMAN GOVERNMENT SPOKESMAN ULRICH WILHELM:

– “The German government is shocked by events in the international waters by Gaza…”

– “Every German government supports unconditionally Israel’s right to self defense,” said Wilhelm, but added that Israeli actions should to correspond to what he described as the “basic principle” of proportionality.

EUROPEAN UNION:

– “High Representative Catherine Ashton expresses her deep regret at the news of loss of life and violence and extends her sympathies to families of the dead and wounded,” said a spokesperson for Ashton, the EU’s foreign policy chief.

– “On behalf of the European Union she demands a full enquiry about the circumstances in which this happened… The continued policy of closure is unacceptable and politically counter-productive. She calls for an immediate, sustained and unconditional opening of the crossing for the flow of humanitarian aid, commercial goods and persons to and from Gaza,” the spokesperson said.

NORWEGIAN PRIME MINISTER JENS STOLTENBERG:

– “This underlines that the blockade of Gaza should be ended as soon as possible,” Stoltenberg told reporters. “This type of military action is unacceptable. The shootings must be investigated and documented. It is clear that this is a use of force against civilians.”

SPANISH SECRETARY OF STATE DIEGO

LOPEZ GARRIDO:

– Spain unequivocally condemns the Israeli attack on the humanitarian flotilla and it does so as a country and as the acting president of the EU Council. Spain has summoned the Israeli ambassador to ask him for explanations of the attack.

DUTCH FOREIGN MINISTER MAXIME VERHAGEN:

– “I want the Israeli ambassador in The Hague to provide clarification today on this,” Verhagen said in a statement. “The Netherlands wants an investigation specifically into how this could have happened.”

GREEK DEPUTY FOREIGN MINISTER DIMITRIS DROUTSAS:

– “There is no excuse. The level of violence cannot be excused … we condemn it and this is exactly the message I conveyed this morning to the Israeli ambassador.

–”Israel must provide us with all the information demanded and (guarantee) the safety of the Greek citizens.

THE VATICAN:

– “This is a very painful fact, in particularly because of the loss of human lives,” said chief Vatican spokesman Father Federico Lombardi. He said the Vatican was against violence “from whatever side it comes.”

Israel flotilla action criticized by friends and foes

(Reuters) – Israel’s storming of a Gaza-bound aid flotilla set off an international furor on Monday, threatening to further strain ties with Turkey and drawing criticism from friends and enemies alike.

World | Turkey

France’s foreign minister said he was “profoundly shocked” by the violence that killed at least 10 pro-Palestinian activists on board a convoy of six ships. The European Union called for an enquiry into the incident.

The head of the Arab League said Arab states must reconsider their dealings with Israel in light of the violence while Turkey, traditionally its strongest Muslim ally in the region, summoned the Jewish state’s ambassador.

“Israel’s attack indicates Israel is not ready for peace. Israel attacked the liberty fleet because it feels it is above the law,” Arab League Secretary General Amr Moussa said in Doha.

“There is no benefit in dealing with Israel in this manner and we must re-assess our dealing with Israel,” he said.

Israeli commandos intercepted the aid flotilla on Monday. Officials said they were met with knives and staves when they boarded the ships, which included a ferry flying the Turkish flag.

The Turkish Foreign Ministry said the interception was unacceptable.

“Israel will have to endure the consequences of this behavior,” the ministry said in a statement.

Television images from Ankara showed dozens of people gathered outside Israeli Ambassador Gabby Levy’s residence in the Turkish capital.

Palestinian President Mahmoud Abbas described the killings as a massacre and French Foreign Minister Bernard Kouchner said the violence could not be justified.

“I am profoundly shocked by the tragic consequences of the Israeli military operation against the Peace Flotilla for Gaza,” Kouchner said in a statement.

“The circumstances of this drama must be fully brought to light and we wish for a thorough inquiry to be put in place without delay.”

IRAN CALLS ATTACK IN HUMAN

Iran, one of Israel’s biggest foes in the Muslim world, said the killings were “inhuman” and would help lead to the Jewish state’s demise.

“All these acts indicate the end of the heinous and fake regime and will bring it closer to the end of its existence,” Iranian President Mahmoud Ahmadinejad told state broadcaster

IRIB.

In the Arab world, analysts said the incident was such an overreaction to an attempt to challenge Israel’s Gaza blockade that it could put the brakes on any further efforts at normalization and may derail the peace process.

Israel has previously halted such activist ships, although some others have reached the Gaza Strip before.

“For the Arab world, any hope of a peace process with this government is going to evaporate. If they are going to react to this simple issue of humanitarian supply this way, the message is very clear,” said Mustafa Alani of the Gulf Research Center.

Israel says food, medicine and medical equipment are allowed in regularly to Gaza. It says an embargo is needed to stop weapons and materials that can be used to produce them from reaching Hamas Islamists.

Lebanese Prime Minister Saad al-Hariri said the move was a “crazy step” that risked inflaming conflict in the region.

The Arab League, which has endorsed indirect peace talks between the Palestinian Authority and Israel that started last month, called an emergency meeting for Tuesday to discuss the violence.

In Cairo, the violence also inflamed public opinion on the streets.

“What do you expect from a state that even America fears and cannot stop or do anything to except use empty diplomatic words?” said Mohamed Morsi, a 45-year-old restaurant owner.

(Additional reporting by Marwa Awad and Alex Dziadosz in Cairo, Ramin Mostafavi in Tehran, James Mackenzie in Paris, Yara Bayoumy in Beirut, Tamara Walid in Dubai and Khaled Oweis in Damascus, Writing by Cynthia Johnston)

Israel flotilla action criticised by friends and foes

DUBAI, May 31 (Reuters) – Israel’s storming of a Gaza-bound aid flotilla set off an international furore on Monday, threatening to further strain ties with Turkey and drawing criticism from friends and enemies alike.

France’s foreign minister said he was “profoundly shocked” by the violence that killed at least 10 pro-Palestinian activists on board a convoy of six ships. The European Union called for an enquiry into the incident.

The head of the Arab League said Arab states must reconsider their dealings with Israel in light of the violence while Turkey, traditionally its strongest Muslim ally in the region, summoned the Jewish state’s ambassador.

“Israel’s attack indicates Israel is not ready for peace. Israel attacked the liberty fleet because it feels it is above the law,” Arab League Secretary General Amr Moussa said in Doha.

“There is no benefit in dealing with Israel in this manner and we must re-assess our dealing with Israel,” he said.

Israeli commandos intercepted the aid flotilla on Monday. Officials said they were met with knives and staves when they boarded the ships, which included a ferry flying the Turkish flag.

The Turkish Foreign Ministry said the interception was unacceptable.

“Israel will have to endure the consequences of this behaviour,” the ministry said in a statement.

Television images from Ankara showed dozens of people gathered outside Israeli Ambassador Gabby Levy’s residence in the Turkish capital.

Palestinian President Mahmoud Abbas described the killings as a massacre and French Foreign Minister Bernard Kouchner said the violence could not be justified.

“I am profoundly shocked by the tragic consequences of the Israeli military operation against the Peace Flotilla for Gaza,” Kouchner said in a statement.

“The circumstances of this drama must be fully brought to light and we wish for a thorough inquiry to be put in place without delay.”

IRAN CALLS ATTACK IN HUMAN

Iran, one of Israel’s biggest foes in the Muslim world, said the killings were “inhuman” and would help lead to the Jewish state’s demise.

“All these acts indicate the end of the heinous and fake regime and will bring it closer to the end of its existence,” Iranian President Mahmoud Ahmadinejad told state broadcaster IRIB.

In the Arab world, analysts said the incident was such an overreaction to an attempt to challenge Israel’s Gaza blockade that it could put the brakes on any further efforts at normalisation and may derail the peace process.

Israel has previously halted such activist ships, although some others have reached the Gaza Strip before.

“For the Arab world, any hope of a peace process with this government is going to evaporate. If they are going to react to this simple issue of humanitarian supply this way, the message is very clear,” said Mustafa Alani of the Gulf Research Centre.

Israel says food, medicine and medical equipment are allowed in regularly to Gaza. It says an embargo is needed to stop weapons and materials that can be used to produce them from reaching Hamas Islamists.

Lebanese Prime Minister Saad al-Hariri said the move was a “crazy step” that risked inflaming conflict in the region.

The Arab League, which has endorsed indirect peace talks between the Palestinian Authority and Israel that started last month, called an emergency meeting for Tuesday to discuss the violence.

In Cairo, the violence also inflamed public opinion on the streets.

“What do you expect from a state that even America fears and cannot stop or do anything to except use empty diplomatic words?” said Mohamed Morsi, a 45-year-old restaurant owner. (Additional reporting by Marwa Awad and Alex Dziadosz in Cairo, Ramin Mostafavi in Tehran, James Mackenzie in Paris, Yara Bayoumy in Beirut, Tamara Walid in Dubai and Khaled Oweis in Damascus, Writing by Cynthia Johnston)

Snap Analysis: Clash at sea is Hamas lifeline

(Reuters) – Israel’s storming of an aid flotilla bound for the blockaded Gaza Strip on Monday is likely to increase pressure on the Jewish state to ease its siege, throwing a lifeline to Islamist Hamas which controls the territory.

World

The violence of the naval interdiction deepened doubt about the future of indirect, U.S.-sponsored peace talks with the Palestinians that began three weeks ago.

With at least 10 activists killed, Israeli Prime Minister Benjamin Netanyahu could face a backlash of unprecedented proportions: the “Free Gaza” convoy included volunteers from regional powerbroker Turkey and other foreigners.

There could also be trouble closer to home, where a restive Israeli Arab minority awaited word of the fate of one of its clerics, Sheikh Raed Salah, who was reported among casualties.

For Israel, storming the ships after they ignored warnings to turn back was part of a strategy of isolating Hamas in its Gaza fiefdom in the hope of tilting Palestinian sympathies toward Western-backed President Mahmoud Abbas.

But Abbas’s credibility has been undermined by Israeli settlement of the occupied West Bank, another territory where Palestinians want statehood, and he can ill afford to stand by as outsiders bleed on behalf of Gaza’s 1.5 million Palestinians.

Similarly challenged will be U.S. President Barack Obama, who plans to host Netanyahu in the White House on Tuesday. Those talks have been cast as a chance to mend testy bilateral ties but Obama, whose administration had urged Israel to ease the Gaza embargo, will be hard put to avoid comment on the flotilla.

Oussama Safa of the Lebanese Center for Policy Studies predicted Obama might “ante up the pressure against the Israelis” to accommodate Abbas, who branded the deaths a “massacre” and called for three days of Palestinian mourning.

HEROES, FOR HAMAS

Hamas, which has largely fallen from world headlines since its war with Israel some 18 months ago, welcomed what it described as a win-win situation from the standoff at sea.

Hamas government head Ismail Haniyeh said of the activists: “You were heroes, whether you reached (Gaza) or not.”

Another delay in peace negotiations that have been stop-start for almost two decades would hold little real drama. Abbas, with his truncated West Bank mandate, is too beholden to Israel and the United States to close the door on rapprochement.

But the possibility of a fissure with Turkey — long Israel’s most important Muslim ally but whose pro-Islamist premier, Tayyip Erdogan, has chafed at the alliance — could deepen Israel’s own isolation even as it tries to persuade wavering Arab countries that Iran is the main regional threat.

Monday’s bloodshed overshadowed a fence-mending visit by Israeli cabinet minister Binyamin Ben-Eliezer to Qatar, among Gulf states that had frozen ties with Israel over its crackdowns against a Palestinian uprising that erupted a decade ago.

As then, hard questions will be asked about the wisdom of using the military — in this case, battle-hardened naval commandos — for what was essentially a policing operation. Israeli officials insisted their troops acted in self-defense.

“I see all the looks that I’m getting. The images (of the naval takeover) are certainly not pleasant,” Ben-Eliezer told Israel’s Army Radio by telephone.

Nahman Shai, a former Israeli military spokesman turned opposition lawmaker, likened the confrontation to the police killing of a dozen Arab citizens who demonstrated and rioted in solidarity with the Palestinians in late 2000.

“The difference is that this time foreigners are involved, which means a much wider impact,” Shai told Israel Radio.

(Additional reporting by Mohammed Assadi in Ramallah, Nidal al-Mughrabi in Gaza and Yara Bayoumy in Beirut; Editing by Samia Nakhoul)

Hamas renews offer to end fight if Israel withdraws

(Reuters) – Hamas leader Khaled Meshaal has stated explicitly that the Palestinian Islamist group will end its armed struggle against Israel if the Jewish state withdraws from Palestinian land it occupied in the 1967 Middle East War.

World

Hamas, which refuses to recognize Israel, has long maintained that it will enter into a long-term truce if Israel pulls out of the West Bank and East Jerusalem and agrees to a right of return for millions of Palestinian refugees.

Speaking on the Charlie Rose program on U.S. PBS television, Meshaal directly addressed the issue of armed resistance, which is the basis of its ideology as a national liberation movement.

“Israel started (the conflict) by the occupation so the resistance is a reaction. The action is the occupation, and the reaction from the Palestinians is that it ends,” Meshaal said, in an interview taped on Thursday, according to a transcript released by PBS.

“So when the occupation comes to an end, the resistance will end, as simple as that. If Israel would go to the 1967 borders … that will be the end of the Palestinian resistance.”

Meshaal said if a “Palestinian state with real sovereignty” were established under the conditions he set out, then the nature of any subsequent ties with Israel would be decided democratically by the Palestinians.

Hamas has ruled Gaza since it won a brief civil war in 2007 against supporters of Western-backed Palestinian President Mahmoud Abbas’s more secular Fatah faction, creating a schism that has undermined the Palestinian cause.

Hamas opposes the indirect peace talks started last month between the Palestinian Authority headed by Abbas and Israel, saying Abbas will compromise on national rights.

The movement had said it could live peacefully alongside Israel if a two-state solution was reached in which all occupied Palestinian land was returned, even though its 1988 founding charter calls for the destruction of Israel and the establishment of a Palestinian state in all of pre-1948 British-mandate Palestine.

(Editing by Kevin Liffey)

Obama invites Netanyahu, Abbas to White House

U.S. President Barack Obama has invited Israeli Prime Minister Benjamin Netanyahu and Palestinian President Mahmoud Abbas to the White House for separate meetings, White House officials said on Wednesday.

The meetings with Obama will be the first for the Middle Eastern leaders since the start of indirect peace talks which began last month, with Obama’s special envoy George Mitchell mediating between the parties.

But Israeli commentators portrayed the surprise invitation to Netanyahu as an attempt by Obama to counter U.S. criticism of what was widely seen as his cold shoulder towards the Israeli leader after a public dispute over Jewish settlements.

Obama has put both Israel and the Palestinians on notice they will be held accountable if either side takes actions to undermine the so-called “proximity talks” Mitchell is mediating.

White House Chief of Staff Rahm Emanuel delivered the invitation in person to Netanyahu in Jerusalem on Wednesday, while on a family visit to Israel.

Obama will host Netanyahu on Tuesday after the Israeli leader completes a visit to France where he will attend a ceremony welcoming Israel to the Organisation for Economic Co-operation and Development, and to Canada.

“(President Obama) has asked me to extend an invitation to you to come visit with him at the White House for a working meeting to discuss both our shared security interests as well as our close cooperation on seeking peace between Israel and its neighbours,” Emanuel told Netanyahu.

In mentioning shared security interests while announcing Netanyahu’s visit, Emanuel appeared to be referring to the U.S. and Israel’s shared desire to curb Iran’s nuclear ambitions.

In Washington, White House spokesman Tommy Vietor announced Abbas’s visit, which had been widely expected, but said no firm date had yet been set.

“The president looks forward to a visit from President Abbas in the near future. We’re just working out timing,” Vietor said.

Abbas aides were not immediately available for comment but the Palestinian leader told France 24 television this week he had been invited to the United States and thought the meeting would probably be in June.

NO BREAKTHROUGH EXPECTED

Getting the two sides to revive negotiations, after an 18-month break, marks Obama’s most tangible Middle East achievement since he took office last year. But expectations remain low for any kind of breakthrough.

Netanyahu, who heads a coalition dominated by pro-settler parties, including his own, has rejected a total freeze on Jewish settlement building in territory captured in a 1967 war.

But no new Israeli housing projects in East Jerusalem have been approved since March, raising speculation Netanyahu has imposed a de facto moratorium that could avoid friction with Washington and any showdown with far-right coalition partners.

Earlier that month, Israel embarrassed Washington and angered Palestinians by announcing during a visit by Vice President Joe Biden a project to build 1,600 homes for Jews in Ramat Shlomo, in an area of the occupied West Bank it annexed to Jerusalem.

Palestinians see settlements as an obstacle to the creation of a state they seek to establish in the West Bank, where Abbas holds sway, and in the Gaza Strip, an enclave controlled by Hamas Islamists opposed to the U.S. peace efforts.

Netanyahu last saw Obama in March in a low-profile White House meeting that was portrayed in Israel as a snub to its leader because it did not include the usual photo opportunity afforded visiting foreign leaders.

Israeli media predicted Obama would try in the coming talks to portray the relationship in a warmer light, ensuring photos are taken and possibly holding a news conference with him.

Since their frosty March meeting, Obama has been at pains to reaffirm publicly Washington’s commitment to Israel’s security.

Israel and the West fear Iran’s uranium enrichment is aimed at producing an atomic bomb, an allegation Tehran denies.

(Additional reporting by Ori Lewis and Tom Perry; editing by Andrew Roche)

Egypt opens Rafah crossing for stranded Palestinians

Gaza, May 15 (DPA) Egypt opened its crossing point with the Gaza Strip at Rafah Saturday to allow around 8,000 stranded Palestinians to cross into Egypt, the Palestinian Border Crossing Corporation (PBCC) said.

‘Around 8,000 Palestinians, including patients, students, businessmen and Palestinians holding other foreign nationalities will be crossing into Egypt starting from Saturday until Monday,’ the PBCC said in a statement.

The statement said that a total of 17 buses, six for people needing medical treatment, and 11 for holders of foreign passports, were scheduled to pass through the terminal Saturday.

The PBCC, which comes under the authority of the Hamas administration ruling the coastal strip, expressed the hope that reopening the crossing would ‘would ease the suffering of the population due to more than three years of a tight blockade had been imposed in the Gaza Strip.’

Since Hamas seized control of the Gaza Strip in June 2007 Egypt has kept the Rafah crossing mostly shut, opening it only sporadically for humanitarian reasons. The crossing is the enclave’s only entry to, and exit from, the Strip which does not pass through Israel, which has imposed its own blockade on the Strip.

Cairo will not open the terminal permanently until Hamas and its rival, the Fatah movement of President Mahmoud Abbas, sign an agreement ending their political rift.

PLO convenes, to agree peace talks with Israel

The Palestine Liberation Organisation (PLO) convened on Saturday and was expected to approve indirect peace talks with Israel, clearing the way for the first negotiations in 18 months.

The PLO executive committee, meeting in Ramallah in the Israeli-occupied West Bank, would approve a U.S. proposal for indirect talks which will be mediated by U.S. Middle East envoy George Mitchell, committee members said.

The United States has sought to revive the peace process, calling the Middle East conflict a “vital national security interest”. However many doubt whether the latest U.S. effort can succeed where years of diplomacy have failed.

The United States proposed the indirect talks as a way to break an impasse over Jewish settlement construction on Israeli-occupied land where the Palestinians aim to establish a state alongside Israel.

The United States said last week it expected the indirect negotiations, known as “proximity talks”, to move forward before Mitchell’s departure from the region, scheduled for Sunday.

Mitchell is set to meet Palestinian President Mahmoud Abbas later on Saturday.

“The (PLO) executive committee will approve proximity talks but we are against it,” said committee member Bassem al-Salhi of the People’s Party. The PLO is dominated by the Fatah faction led by Abbas. The Arab League last week approved four months of indirect negotiations.

(Reporting by Ali Sawafta and Mohammed Assadi; Writing by Tom Perry)

UAE calls again on Iran to end islands “occupation”

(Reuters) – The foreign minister of the United Arab Emirates refused to back down in the face of Iranian anger and repeated Sunday his call for Tehran to end its “occupation” of three islands in the Gulf.

World

The minister’s use of the word last week and his explicit comparison of the islands claimed by the UAE to Arab lands occupied by Israel was called “brazen and impudent” by Tehran, which said Saturday it hoped he had been misquoted.

But Sheikh Abdullah bin Zayed al-Nahayan, on a visit to Palestinian President Mahmoud Abbas in the Israeli-occupied West Bank, again called Iran’s hold on Abu Musa and the Greater and Lesser Tunbs an occupation that was hindering the non-Arab, Muslim power’s relations with all its Arab neighbors.

“The UAE’s position is one of hope that the Iranian side will end this dispute peacefully and calmly,” Sheikh Abdullah told Reuters after his meeting with Abbas.

“We hope the Iranian side will look at this dispute and the occupation not only as an obstacle to improving relations between our two countries but also as an obstacle to Iran’s relations with Arab states. For the sake of everybody, we hope this issue will be resolved peacefully and as soon as possible.”

Arab states broadly back the UAE claim to the islands, which lie close to shipping lanes used for oil and gas export.

Last week, Sheikh Abdullah was quoted by the UAE news agency saying: “Occupation of any Arab land is occupation … Israeli occupation of Golan Heights, southern Lebanon, West Bank or Gaza is called occupation and no Arab land is dearer than another.”

Iran’s foreign ministry spokesman, quoted by a semi-official news agency Saturday, said he hoped the UAE minister had been misquoted. He added: “The repetition of such statements will ensure the intense reaction of the Iranian people.”

The UAE, a U.S. ally, and Iran have strong trade relations but diplomatic ties were strained after Iran installed maritime offices on one of the disputed islands in 2008.

(Reporting by Ali Sawafta, writing by Alastair Macdonald; Editing by Janet Lawrence)

U.S. envoy wraps up Mideast visit, back next week

(Reuters) – A U.S. Middle East envoy ended a three-day peace mission on Sunday with no sign of any breakthrough in efforts to revive Israeli-Palestinian negotiations, but he said he would return next week.

Israeli Prime Minister Benjamin Netanyahu, briefing his cabinet on his meetings with George Mitchell, said it would soon become clear whether peace talks suspended since December 2008 would get under way.

In a statement summing up his visit, Mitchell said he held “positive and productive talks” with Israeli and Palestinian leaders in an effort “to improve the atmosphere for peace and for proceeding with proximity talks,” a reference to indirect, U.S.-mediated negotiations.

Netanyahu has given no ground publicly over U.S. and Palestinian calls to halt the construction of homes for Jews on occupied territory in and near Jerusalem, an issue that has opened a rift between Israel and the United States.

The Palestinians, who want Israeli-annexed East Jerusalem as the capital of a future state in the West Bank and the Gaza Strip, have demanded a settlement freeze as a condition for peace talks.

Palestinian sources said Mitchell proposed a compromise in which the Palestinians would begin indirect talks in return for an unwritten commitment by Washington to assign blame publicly to any party that took action compromising the negotiations.

The formula appeared to envisage a situation in which Israel would quietly delay implementing some housing projects in and around East Jerusalem, without declaring a freeze that could anger pro-settler parties in Netanyahu’s governing coalition.

Israel captured East Jerusalem, the West Bank and the Gaza Strip in a 1967 war and regards all of Jerusalem as its capital, a claim that is not recognized internationally.

Hamas Islamists, opposed to Palestinian President Mahmoud Abbas’s peace efforts, control the Gaza Strip.

PEACE PROCESS

Addressing his cabinet, Netanyahu said Israel and the United States want to “begin a peace process immediately,” and that he hoped the Palestinians shared the same goal.

“We will know in the coming days whether the process will get under way. I hope that it will indeed get under way,” he said in public remarks at the cabinet session.

Mitchell said in the statement that his deputy, David Hale, would remain behind to work with the parties this week to prepare for his return to the region next week.

On Saturday, Palestinian President Mahmoud Abbas urged U.S. President Barack Obama to impose a solution to the Middle East conflict that would give the Palestinians an independent state.

Abbas’s appeal to Obama came amid widespread media reports that the U.S. president was considering floating a proposal that would set the contours of a final peace deal.

Any such move would likely be opposed by Israel, which says only negotiations can secure a final settlement to the conflict.

Aides to Abbas raised the possibility that he would meet Obama in Washington next month but said no invitation had been issued.

(Additional reporting by Ali Sawafta in Ramallah, Editing by Sonya Hepinstall)

Fayyad government approves July local election in West Bank

(Reuters) – The Western-backed government of Palestinian Prime Minister Salam Fayyad gave the go-ahead on Sunday for local elections in the West Bank in July, despite opposition from rival Hamas Islamists who run the Gaza Strip.

“The cabinet decided to continue with all necessary preparations for carrying out the polls for local councils in the West Bank on July 17,” it said in a statement after a meeting in the city of Ramallah.

Hamas seized control of the Gaza Strip from Palestinian President Mahmoud Abbas’s Fatah party in 2007. The two parties have been in a state of open hostility since.

Legislative and presidential elections called in January by Abbas were canceled due to a ban by Hamas on participation in the Gaza Strip.

An Egyptian plan aimed at ending the Palestinian division set legislative and presidential elections for June. Fatah leader Abbas, who is supported by Cairo, signed the document, but Hamas has refused to.

The Palestinians last held local elections in 2005, shortly before a legislative election in which Hamas defeated Fatah.

(Reporting by Ali Sawafta; Writing by Joseph Nasr, Editing by Mark Trevelyan)