Israel, Palestinians start tough talks

JERUSALEM - Israeli and Palestinian negotiators took on the most contentious issues in their bitter conflict on Monday under a U.S.-backed effort to hammer out a final peace deal by the end of the year.

Chief Palestinian negotiator Ahmed Qureia and Israel's lead negotiator, Foreign Minister Tzipi Livni, met for two hours at a Jerusalem hotel and began discussing sovereignty over Jerusalem, Palestinian refugees, and the final borders of a Palestinian state, an Israeli spokesman said.

"They started talking about the core issues," Israeli Foreign Ministry spokesman Arye Mekel confirmed. The two plan to meet about once a week, Israeli officials said.

There was no immediate comment from the Palestinians but Palestinian President Mahmoud Abbas had said Sunday that the talks would touch on the three key issues.

The talks could widen internal divisions in both the Israeli and Palestinian camps, weakening Abbas and Israeli Prime Minister Ehud Olmert.

Hawkish Israeli lawmaker Avigdor Lieberman, head of the Yisrael Beiteinu Party, has threatened repeatedly to pull out of Olmert's coalition if the government begins discussing the three questions at the heart of the Israeli-Palestinian conflict.

Olmert's government would still command 67 of parliament's 120 seats if Yisrael Beiteinu's 11 lawmakers were to leave. But the ultra-Orthodox Shas party, which has 12 lawmakers, has also threatened to leave the coalition if Jerusalem comes up for discussion.

That would leave Olmert without a majority, making it very hard to win support for the sacrifices required by any peace agreement.

Lieberman is due to meet with Olmert on Tuesday to sound out the prime minister on his intentions, Army Radio reported. After the meeting, faction leaders will meet to decide whether to remain in the government, Lieberman spokeswoman Irena Etinger said.

Abbas, meanwhile, is struggling with the Palestinians' own political divide.

His moderate government controls the West Bank but Islamic militants in Hamas-run Gaza who fire rockets and mortars at southern Israel almost daily.

Even before Livni and Qureia sat down for their talks, Hamas spokesman Sami Abu Zuhri demanded that Abbas "stop giving away Palestinian blood and rights for free."

"This is a failed meeting that is going to provide a cover for the occupation crimes against our people," Abu Zuhri said in a text message to reporters.

Hamas wrested control of Gaza from Abbas-allied forces in June. The militant Muslim group is isolated internationally and is not a party to the negotiations. Olmert has said repeatedly that Israel would not implement any peace agreement before Gaza militants were subdued.

In violence late Sunday, an Israeli aircraft blasted a car in Gaza City, killing three militants, two from a group linked to Hamas and the other to Fatah, Palestinians said. The Israeli military said the two targeted militants were involved in rocket fire at Israel.

At a U.S.-sponsored conference in late November, the Israelis and Palestinians publicly declared their intention to relaunch negotiations for the first time in seven years, and their hope to reach an agreement before President Bush leaves office.

The talks stalled over Israeli construction in disputed territory and Palestinian militant activity.

Then last week, before Bush arrived in the region to try to propel negotiations forward, Abbas and Olmert instructed their negotiators to start discussing the key issues.

"If we reach an agreement on all these issues, then we can say that we have reached a final agreement," Abbas said in a speech Sunday, where he announced that the core issues would be tackled Monday.

The Haaretz newspaper reported Monday that Israeli settlers have agreed to dismantle 18 of 26 unauthorized settlement outposts Israel must evacuate under the U.S.-backed "road map" peace plan, which is serving as the foundation for the renewed talks. Settlers living in the outposts will move to existing settlements, the daily said.

The settlers have erected the encampments across the West Bank to break up territory the Palestinians claim for a future state.

Standing next to Olmert at a Jerusalem news conference last week, Bush pointedly said the outposts "ought to go." On Sunday, Olmert told political allies it was a "disgrace" the outposts remained standing four years after Israel promised to pull them down.

Israeli Defense Minister Ehud Barak, whose office oversees settlement activity, has been meeting with settlers for months to try to work out a way to evacuate outposts without stirring up an uproar among settlers and their supporters.

Lieberman, however, also opposes Israel's commitment to the U.S. to evacuate the encampments. Settler leader Pinchas Wallerstein told Army Radio on Monday that settlers would mount "a fierce battle" against any plans to evacuate the encampments, which were built without official authorization, but with the government's knowledge.