Deal including Jerusalem unlikely by year's end: Olmert (Roundup)

Jerusalem - An Israeli-Palestinian peace deal that would include a settlement on disputed Jerusalem was unlikely to be signed by the year's end, Prime Minister Ehud Olmert said Monday, but added that gaps on other key issues were 'bridgeable.' The sides could still reach a deal that would include settlements on the issues of borders and refugees, if the Palestinians agreed to postpone settling the status of Jerusalem, he told a parliamentary committee dealing with foreign affairs and security. 'I do not believe we can reach understandings this year which will include the subject of Jerusalem,' Olmert said. 'As regards the other core issues - the gaps are not dramatic,' the Ynet news site quoted him as saying. The gap regarding the borders between Israel and a future Palestinian state 'is also bridgeable,' he said, and added that even the highly-loaded issue of the future of Palestinian refugees and their descendants - considered one of the deal-breakers in any attempt to reach an Israeli-Palestinian peace treaty - could be solved in a satisfactory way to Israel. Olmert and Palestinian President Mahmoud Abbas made an ambitious pledge at last November's Annapolis peace summit to try and forge a deal by the end of 2008, and peace talks between the sides resumed - after a seven-year hiatus - around the turn of the year. The future of Israeli-occupied East Jerusalem is considered one of the most intractable of the core issues being discussed, and a potential deal-breaker, given that it also includes the flashpoint Temple Mount/Haram al-Sharif compound, holy to both Jews and Muslims. Palestinians want East Jerusalem as the capital of their future state, but Israel, which captured it in the 1967 war and annexed it shortly afterwards, has traditionally said a 'united' Jerusalem is its 'eternal' capital. However, according to some reports, Israel is prepared to cede the Muslim neighbourhoods of the city to Palestinian sovereignty, though it insists on retaining the Jewish neighbourhoods built on East Jerusalem West Bank land after the 1967 war. Olmert clearly hinted he was in favour of ceding East Jerusalem's Arab neighbourhoods to the Palestinians, when he told the Knesset (parliament) Foreign Affairs and Defence Committee Monday: 'Anyone who thinks that it is possible to live with 270,000 Arabs in Jerusalem should take into account that there will be more bulldozers, tractors and vehicles used for attacks.' He was referring to two identical attacks of last week and earlier this months, in which Palestinians from East Jerusalem used their work bulldozers to kill Israelis in West Jerusalem. Three passers-by had been killed and some 56 injured. Olmert has previously intimated that Jerusalem is a potential deal-breaker and a problem which could scuttle a final agreement if the sides tried to solve it along with the other core issues. Speaking during the visit to Israel in May of US President George W Bush, the premier said publicly that he preferred leaving the Jerusalem imbroglio for 'later.' 'We need to reach an understanding ... that will relate to the issue of borders, to the issue of refugees, to the issue of the security arrangements, and will set forth also, at the end of the day, the framework for how to deal later with the issue of Jerusalem,' he said. But it is far from certain whether the Palestinians will agree to sidelining Jerusalem, given how important the issue, which is highly emotional for both sides, is to their national aspirations. Abbas would have difficulty selling a deal to the Palestinian public, which includes Israel retaining control of East Jerusalem's Jewish neighbourhoods and of the Haram al-Sharif/Temple Mount. Similarly, Olmert will have problems - from within his coalition as well - getting a deal passed which will see Israel accepting the Palestinian demand for sovereignty over the compound, built on the site of the Biblical Jewish temple, but which Muslims believe marks the spot from where the prophet Mohammed ascended to heaven. A senior Palestinian official meanwhile called Monday a three-way meeting between Israeli, Palestinian and US officials in Washington scheduled for Wednesday a 'last chance' for the troubled negotiations. 'These meetings will be the last chance for peace talks between the two sides before a declaration by the Palestinian leadership the peace negotiations with Israel have failed,' Yasser Abed Rabbo said. The Israeli-Palestinian negotiations, headed by Israeli Foreign Minister Tzipi Livni and former Palestinian premier Ahmed Qureia, are being held amid a virtual media blackout, and with conflicting reports - Israeli spokesmen are generally optimistic, Palestinian representatives less so - about the progress being made. It is unclear whether the opposing assessments reflect genuine opposing views on how the talks are progressing, or whether each side is trying to pressure the other. But Olmert's legal troubles at home have cast further doubt on the talks. Prosecutors have said they will 'very soon' decide on whether to formally charge the Israeli premier with 'illegally' accepting hundreds of thousands of US dollars from a US businessman and fundraiser, possibly as bribes. A police investigation into the suspicions is ongoing, but Olmert has promised to resign of an indictment against him is filed.