A senior Israeli source, who took part in unofficial Turkey-mediated talks between Israel and Syria, has said that the two sides are discussing a border line which will be based on the June 4 1967 borders and the future of the Golan Heights' residents, the London-based Arabic-language al-Sharq al-Awsat newspaper reported Wednesday.

The source confirmed that "serious progress has been made in the talks."

Not Giving Up   Assad dismisses Israel demands over Iran  / Reuters   Syrian president tells British MPs his government intends to maintain its 'normal relations' with Tehran while it conducts indirect talks with Jewish state to regain Golan Heights Full story   According to the Israeli source, the future border line is unclear at this time and there are at least two perceptions regarding its location. The two main disagreements, he said, are the border line in northeastern part of Lake Kinneret and another area up north.

He noted that the Syrians sought to "touch the Kinneret waters," while the Israeli object.

Addressing the settlement in the Golan Heights, the Israeli source said that the two sides have already agreed that the Syrian sovereignty over the Golan was Damascus' right, and that a creative formula must be formed in regards to this issue, in a way which will not cause great tension in Israel.

The paper reported that according to the source, 85% of the issues standing between the two countries on the way to a peace deal have already been agreed. One of the issues which have yet to be discussed is Israel's demand that Syria detach itself from Hamas and Hizbullah and break its strategic alliance with Iran.

  "I am optimistic," the source told the newspaper reporter. "This does not mean that Syria will have to sever its ties with Iran and its followers in Lebanon and the Gaza Strip, but it will join those influencing them in a positive manner – in accordance with the peace relations between Israel and Syria.

"We have a clear example for that – the relations between Syria and Turkey, just like Damascus withdrew its support for the PKK (Kurdish militant organization fighting for independence from Turkish rule)."