The U.S. expectations President Bush set out Thursday for negotiations and a peace deal between Israel and the Palestinians, following two days of separate meetings with leaders on both sides:

_A peace agreement can and should be complete within the year.

_Bargaining must be serious, "starting right now." Israeli Prime Minister Ehud Olmert and Palestinian President Mahmoud Abbas should continue their regular summit meetings.

_The "point of departure" for talks must be an end to the Israeli "occupation" of Palestinian land seized in the 1967 war.

_An eventual settlement on the borders for Israel and a new Palestinian state would have give and take on both sides and must be mutually negotiated.

_The lines would not be exactly those drawn when Israel was formed in 1948-1949, a reference to the expectation that Israel will keep some of the settlements it has built near Jerusalem since. There is also the expectation, though, that Palestinians would be compensated for the loss.

_On the Palestinian side, a future state which Bush called Palestine must be "viable, contiguous, sovereign and independent." While Bush was not specific, that means a state able to stand on its own with borders that are not so chopped up by Israeli homes or security bulwarks as to be unworkable or ungovernable. Bush had earlier said a "Swiss cheese" state isn't acceptable.

_The world should consider compensating Palestinians and their descendants for the loss of land or homes in present-day Israel, thus closing off the Palestinian claim to a right to return to that property. The money would presumably go to resettle refugees in an independent Palestine or in other places where they have landed themselves over six decades.

_Jerusalem is "a tough issue," Bush said, with religious and other sensitivities. He offered no prescription for resolving the claims both sides make to administer sites holy to Christians, Jews and Muslims.

_Israel must be assured of secure, defensible borders that are internationally recognized. That would mean both that Israel could be confident that terrorists are not massed next door and that Arab and other holdouts would recognize Israel at least as a territorial reality. Bush called on Arab states to "reach out" to Israel, but he did not specifically press for full diplomatic recognition of the Jewish state.

_Bush reiterated U.S. commitment to Israel's security.

_Both sides must honor their commitments under the 2003 internationally backed "roadmap" peace plan.

_Neither side should do things counter to their roadmap obligations or that prejudges a final peace deal. Bush said that for Israel that means "ending settlement expansion and removing unauthorized outposts." For Palestinians it means "confronting terrorists and dismantling terrorist infrastructure."