Syria has always demanded the full return of the Golan Heights, which were captured by Israel in the 1967 war, as a pre-condition for any peace agreement with Israel. The Golan is a strategic plateau of about 1,200 square kilometres, which overlooks much of north-eastern Israel.

In 1981, the Israeli parliament voted to extend Israeli law and jurisdiction to the Golan, although this has never been internationally recognised. This annexation could make it more difficult for any Israeli leader wanting to persuade parliament to ratify a peace treaty with Syria. Former prime ministers Yitzhak Rabin and Ehud Barak said they would hold a national referendum on any deal with Syria, which would enable them to circumvent parliament.

Opponents of ceding the Golan Heights argue that Syria cannot be trusted and that it would be suicidal to forego such a vital strategic asset, which enables Israel to peer deep into Syrian territory and so acts as an essential early-warning system against a surprise attack. The topography of the Golan also provides Israel with a physical buffer against any Syrian offensive.

But supporters of a deal with Syria counter that in an age of missiles, territory has become less important. Once a deal is signed with Syria, they add, the strategic situation in the region will change fundamentally, making the Golan Heights a far less vital strategic asset.

Several past Israeli prime ministers have been prepared to provide quiet assurances that they are willing to cede the Golan Heights in exchange for a full peace with Syria, although there has been some dispute over the exact depth of the withdrawal that each prime minister has been ready to countenance.

THE 1967 LINE: This remains the main stumbling block in negotiations. Syria wants Israel to withdraw to the Jun. 4, 1967 line, leaving it in control of the north-eastern shore of the Sea of Galilee, which is Israel's main water source. Israel has rejected this demand in the past, saying that the waterline must remain under its control. It has proposed the international border, which is not flush on the waterline, as the line to which it will withdraw.

When former prime minister Ehud Barak met with then Syrian foreign minister Farouq Shara in U.S.-hosted talks in 2000, the dispute over Syrian access to the Sea of Galilee -- Barak reportedly insisted that the border run a few hundred metres from the shoreline -- ultimately scuppered the negotiations.

MOUNT HERMON: This peak, which abuts the Golan, was also captured by Israel during the 1967 war and is known in Israel as "the eyes of the nation" because it enables Israel to observe troop movements both in Syria and in Lebanon. When Israel and Syria held talks in 2000, one of the issues on the table was an Israeli presence at an early-warning ground station on Mt. Hermon once Israel had ceded the Golan. The station was to be operated by the U.S. and France.

NORMALISATION OF TIES: Israel insists that full diplomatic and economic ties, including an exchange of ambassadors, be part of any peace treaty with Syria. The Syrians have backed a 2002 Arab peace proposal that offers Israel normal ties in exchange for a full withdrawal from all Arab territory captured in the 1967 war, including the Golan Heights, the West Bank and East Jerusalem. It remains to be seen whether Syria is ready to sign a peace treaty with Israel separate from a deal with the Palestinians that includes an Israeli withdrawal from the West Bank.

DEMILITARISATION: Israel wants the entire Golan Heights, and possibly more territory stretching inside Syria from the Heights, to be completely demilitarised to compensate for the loss of the mountain range and the strategic depth it affords Israel. In the past, Syria has demanded that Israel also carve out a demilitarised zone on its side of the border, although the exact depth of each zone will have to be negotiated.

WATER: The Golan contains the main tributaries to the Sea of Galilee, which is Israel's main water source, providing the country with about a third of its water. During the 1960s, efforts by Syria to divert these tributaries led to military clashes. Israel will want assurances from Syria that it will not try to divert the rivers that feed the Sea of Galilee.

SYRIA'S TIES WITH IRAN, HEZBOLLAH AND HAMAS: Israel wants Syria to sever ties with Iran, Hezbollah and Palestinian militant groups like Hamas and Islamic Jihad, which have offices in Damascus. Syria has rejected this as a precondition for talks, saying the issue can be discussed during negotiations.

Israel's defence establishment has strongly supported talks with Syria, believing they could serve Israel's strategic interests by helping to pry Damascus away from Tehran. Israel believes that Iran is determined to acquire nuclear weapons and many in the defence establishment argue that if relations between Syria and Iran can be eroded, it would substantially undercut Tehran's influence in the region.

SETTLEMENTS: There are close to 20,000 Jewish settlers, living in some 30 settlements on the Golan Heights, who will have to be evacuated in the event of a peace deal with Syria. During previous contacts there has been some disagreement between Israel and Syria over the time-frame for the removal of settlements, with Israel suggesting a 15-year-period and the Syrians calling for a 10-year timetable.

The settlers living on the Golan Heights are mainly secular and do not see their presence there in Biblical or messianic terms like the settlers who have spearheaded settlement in the West Bank. But this doesn't mean they are lacking in motivation or political organisation when it comes to fighting governments who have shown a willingness to engage Syria.

In the mid-90s, when the government intimated it was prepared to cede the Golan for peace with Syria, they launched a highly effective grassroots campaign called "Ha'am im Hagolan" (The People are with the Golan), which was aimed at thwarting any government plans to relinquish the mountain range. Opinion polls consistently show that they have the backing of a clear majority of Israelis, with close to 70 percent saying they oppose giving up the Golan Heights.

THE U.S. ROLE: One of Syrian President Bashar Assad's key goals in renewing talks with Israel is to extract Syria from U.S. President George Bush's "axis of evil", and re-establish ties with the U.S. For this reason, he has insisted on U.S. involvement in the negotiations. Israel will also want the U.S. to be involved because they will have to foot the "peace bill", including a substantial arms package for Israel to compensate loss of the Golan Heights.

Bush harbours deep antipathy toward the Assad regime, and for a long time this dissuaded Israeli Prime Minister Ehud Olmert from re-engaging the Syrians around the negotiating table. During a recent visit to Israel, Bush told Olmert that he did not believe Syria would sever its ties with Iran in exchange for a peace treaty with Israel, but he said he would not oppose the renewal of talks between Israel and Syria. Nevertheless, if a peace agreement is to be signed, it will likely have to wait until there is a new resident in the White House in 2009.