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Jerusalem dispute is shelved as peace talks lurch forward

JERUSALEM - Israeli and Palestinian leaders agreed Thursday to put aside a dispute over Israeli construction in a Jerusalem neighborhood and get down to work on a final peace agreement, according to participants at the meeting.

The two-hour meeting between Israeli Prime Minister Ehud Olmert and Palestinian President Mahmoud Abbas appeared to break an impasse that has clouded renewed peacemaking, clearing the way for a visit by President Bush next month.

It was the first summit between the two leaders since they relaunched peace talks at a U.S.-hosted meeting last month.

"Beginning next week, final status negotiations will be resumed," said Ahmed Qureia, the lead Palestinian negotiator.

At last month's summit in Annapolis, Md., Olmert and Abbas agreed to restart peace talks after seven years of violence, setting a 2008 target for a final peace agreement. But attempts to begin negotiations have foundered over a new Israeli plan to build more than 300 new homes in a Jewish neighborhood of East Jerusalem.

The Palestinians claim East Jerusalem as their future capital and have demanded that the project be halted.

Israel, which captured East Jerusalem in the 1967 Mideast War and annexed it, has rejected the demand.

Although the dispute wasn't settled in Thursday's meeting, the two sides agreed that the matter should no longer hold up peacemaking, officials said. Both sides called the talks "positive."

"There was a joint desire to move forward, to make progress," said Israeli government spokesman Mark Regev.

Qureia said pledges made by Olmert to limit settlement activity were "satisfactory," though he also said the Palestinians were seeking U.S. intervention. At the Annapolis peace summit, Israel and the Palestinians said the United States would judge implementation of the plan.

In addition to Israeli pledges to halt settlement activity, the peace plan requires the Palestinians to dismantle militant groups that target Israelis.

Thursday's meeting appeared to calm the atmosphere less than two weeks before Bush's arrival.

The president is scheduled to visit the region on Jan. 8 for the first time in his seven-year tenure to build on momentum from the Annapolis conference.

However, violence continued alongside the talks. Late Thursday, Israeli aircraft killed a senior Islamic Jihad commander, Mohammed Abdala, the militant group said. He was the third senior Islamic Jihad militant killed in the past two weeks. The Israeli military confirmed that it had carried out an airstrike.

Also, five Palestinian militants were killed and 14 other people were wounded in two Israeli attacks in Gaza. Palestinian medical officials said four civilians, including a 13-year-old boy, were among the wounded.

[Last modified December 27, 2007, 22:44:58]