Israeli Prime Minister Ehud Olmert was due to meet Palestinian Authority Chairman Mahmoud ‘Abbas in Jerusalem on Tuesday in an attempt to overcome differences facing the final-settlement talks, Palestinian sources said.
 
The differences followed Olmert’s announcements on Sunday that ’Abbas had consented to hold off discussing Jerusalem until the end of the negotiating process.
Speaking at a conference in Jerusalem, Olmert also revealed the aim of the United States-backed peace talks is to reach an understanding on "basic principles" for a Palestinian state by the end of 2008 rather than a full-fledged agreement.

"I don't know if we will be able to reach an understanding with the Palestinians," Olmert said. "I hope we will. We'll do everything in our power to. But we will not start with the issue which is the most difficult. We will postpone dealing with Jerusalem to the last phase of the negotiations."
Olmert’s remarks angered P.A. officials who confirmed all issues will be discussed in parallel and nothing will be delayed or removed from the agenda.
 
Head of the Palestinian negotiation team ‘Saib ‘Ariqat said on Sunday the talks will include all final settlement issues as agreed during the Annapolis conference last fall.
 
“There are six issues, which are Jerusalem, water, borders, refugees, settlements, the state and mutual relations…And we will not accept either delaying or excluding any of them.”
 
Regarding the declaration of principles, ‘Ariqat added “regardless of what it is going to be called, the most important thing here is to reach a solution on all these issues.”
 
Urged on by U.S. President George W. Bush to reach a peace agreement before he leaves office next January, the two sides have agreed to address core issues such as borders, the future of Jerusalem, and the Palestinian refugees.

The ‘Abbas-Olmert meeting came amid news of a crisis facing the talks due to the failure of their negotiation teams to reach any breakthrough despite intensive meetings.
 
The crisis also came after the Olmert government revealed new construction plans for Jerusalem, in a bid to hold onto its coalition.