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Israel, Palestinians in high-level economic talks

US envoy to discuss settelments with Israeli diplomats, again

Israel and the Palestinians on Wednesday held their highest-level talks since Israeli Prime Minister Benjamin Netanyahu took office five months ago, focusing on economic issues while formal peace negotiations remained stalled.

The meeting was a signal from both sides that dialogue is still possible despite sharp differences Washington has been trying to bridge amid its owned rift with Israel over settlements.

"We hope that away from politics, we will be able to do something on the ground to improve the economic realities of Palestine," Palestinian Economy Minister Bassem Khoury said with Israeli regional development minister and Vice Prime Minister Silvan Shalom at his side.

Israeli and Palestinian ministers met Wednesday in Jerusalem in the first such encounter since hawkish Israeli Prime Minister Benjamin Netanyahu was sworn in five months ago.

The first ministerial meeting took place at the King David Hotel and focused on economic issues, including joint industrial parks meant to further what Netanyahu has termed an "economic peace," officials said.

We hope that away from politics, we will be able to do something on the ground to improve the economic realities of Palestine

Bassem Khoury, Palestinian economy minister

The agenda included proposals to ease restrictions on the entry of Palestinian businesspeople and VIPs to Israel, according to officials. They also want to boost Israeli meat exports to the West Bank and dairy imports from the West Bank to Israel and increase medical treatment for Palestinians in Israel.

"I think that the Palestinians have understood that there is no point in continuing to boycott the talks with Israel and that these talks will not be conditioned by any concessions on our part," Shalom told reporters

It marked the first ministerial meeting since Netanyahu was sworn into office on March 31 and comes amid an international push led by Washington to revive stalled Middle East peace talks.

But in the West Bank, Nabil Abu Rdainah, a spokesman for President Mahmoud Abbas, reaffirmed the Palestinian position that peace talks, suspended since December, could not resume without an Israeli commitment to freeze settlement in the occupied West Bank.

He said the Jerusalem meeting "fell within the framework of economic issues and was not related to political negotiations."

Settlement talks with U.S.

Meanwhile, Israeli officials were to meet with U.S. envoy George Mitchell in New York as part of his push to restart negotiations leading to a peace deal and Palestinian statehood.

U.S. State Department spokesman Ian Kelly told reporters Tuesday that Mitchell would meet in New York on Wednesday with Israeli Defense Minister Ehud Barak's chief of staff Michael Herzog.

An Israeli diplomat told AFP that Yitzhak Molcho, Prime Minister Benjamin Netanyahu's attorney, would also attend the meeting which he said comes as the two sides move toward an understanding on settlements.

A settlement deal would end the most serious rift in U.S.-Israeli relations in a decade and could lead to an announcement by Obama, during the U.N. General Assembly later this month, of a resumption of Middle East peace talks.

U.S. President Barack Obama has taken the public stance that Israel must halt all settlement activity under a 2003 peace "road map" while Netanyahu has resisted a complete construction moratorium, saying settlers were entitled to lead what he termed "normal lives."

The discussion is basically how to handle what kind of understanding to reach on settlements

Israeli diplomat

"It's definitely not a dispute," the Israeli diplomat said on the condition of anonymity when asked about U.S. demands for a total settlement freeze. "There's a very good will on both sides to reach an encompassing understanding."

The diplomat added: "The discussion is basically how to handle what kind of understanding to reach on settlements."

The two sides are trying to work out the "length, scope, exit strategy, what happens after such a freeze, should it be agreed upon," he said.

He said he does not know the "terminology" of the discussions, but when Israel refers to a freeze, it refers to the West Bank, not east Jerusalem, which Israel wants as part of its undivided capital.

The Palestinians want east Jerusalem as the capital of a future state. Palestinian President Mahmoud Abbas has ruled out holding any peace talks with Israel until a full and lasting freeze in Jewish settlements is put in place.

The talks, the Israeli diplomat said, follow those Mitchell held last week in London with Netanyahu and will pave the way for a new round of talks between Mitchell and Barak.