The United States expects Israel to make concrete concessions to the Palestinians before U.S. President Barack Obama's visit to Cairo on June 4, an American official said during Prime Minister Benjamin Netanyahu's visit to Washington this week.

The cabinet is due to discuss the situation in the Gaza Strip this Sunday, and one concession the U.S. would like to see is for Israel to decide at this meeting to ease its restrictions on imports and exports of goods to Gaza. It also wants Israel to ease restrictions on movement in the West Bank.

The American official said this would ease Obama's efforts to persuade Arab states to begin taking steps toward normalization, without waiting for a full-fledged Israeli-Palestinian peace agreement. To Netanyahu's pleasure, Obama favors this idea, recognizing that it would soften Israeli public opinion on the peace process. However, senior Saudi officials have so far rejected outright the idea of gradual normalization, American sources said.

The Saudis, for their part, have been pressing Obama to present a detailed plan for an Israeli-Palestinian final-status agreement and then urge the parties to begin negotiations on its implementation.

Senior Saudi officials have proposed that Obama present a plan similar to that offered by former president Bill Clinton - one that would call for an Israeli withdrawal from almost all of the West Bank, a division of Jerusalem and a complex arrangement on the refugees.

Obama is slated to make a major speech on his visit to Cairo next week. He was widely expected to outline his plans for the peace process. However, senior American officials told their Israeli colleagues this week that Obama will not present a new peace plan in this speech. Rather, he will focus on extending a hand to the Arab and Muslim world. Obama will outline the basic principles of his policy on the peace process, the officials said, but will not go into detail, nor will this be the focus of the speech.

One proposal that Netanyahu made, both in his White House meeting with Obama on Monday and in earlier meetings with the leaders of Egypt and Jordan, was that the Arab states amend the Arab peace initiative to make it more attractive to Israel and enable it to serve as a basis for negotiations between Israel, the Palestinians and the Arab states. In private conversations, however, the Saudis told American officials that they oppose the idea of amending the initiative, and particularly the idea of softening its proposal on the refugees.

To Netanyahu, it is important that the Arab initiative be a basis for negotiations rather than an ultimatum - full withdrawal from the territories in exchange for normalization. At his meetings in Washington, he said the general tenor of the Arab initiative was acceptable, but he was not willing to sign off on all its details.

Palestinian Authority President Mahmoud Abbas will visit Washington next week, and Obama is expected to tell him that he should resume final-status negotiations with Israel immediately and not set any preconditions for the talks.

On another issue, Obama told Netanyahu at their meeting on Monday that Washington has no plans to change its policy on Israel's nuclear program, according to an Israeli source.

"At the talks, Obama expressed his deep commitment to Israel's security and his full adherence to the deep presidential understandings in this area," the source said.

In 1969, the United States and Israel reached an understanding under which Israel would maintain ambiguity about its nuclear program and would refrain from conducting a nuclear weapons test. In exchange, the U.S. would refrain from pressing Israel to sign the Nuclear Nonproliferation Treaty, which would require Israel to give up any military nuclear capabilities it had and place the reactor in Dimona under international supervision. These understandings, which have remained in force to this day, form the basis of Israel's nuclear policy.

In recent weeks, Israeli commentators have expressed fear that the U.S. was planning to change this policy, after a mid-level State Department official publicly declared that Israel, India, Pakistan and North Korea should all join the NPT. But this comment was actually mere routine, reflecting America's commitment in principle to eventual worldwide nuclear disarmament, and was not aimed specifically at Israel.

During his previous term as prime minister, Netanyahu requested and obtained a written commitment from then-president Clinton that the U.S. would preserve Israel's strategic deterrence capability - a euphemism for nuclear capability - and make sure that its arms control initiatives did not impair this capability. Netanyahu also told Clinton that Israel would not join an American initiative to draft a new treaty that would ban the production of plutonium.

On Iran, a senior Israeli official said the premier was also pleased with the outcome of the visit: Obama set a deadline - the end of the year - for his proposed dialogue with Iran, and Netanyahu did not promise that Israel would refrain from taking action against Iran on its own. Instead, the official said, Netanyahu stressed that Israel reserves the right to defend itself.

However, he also said that Israel has not yet made any decision on military action against Iran.

On the settlements, no agreements were reached, but the two leaders agreed to set up working groups on this issue, as well as on Iran and normalization with the Arab world. Netanyahu returned to Israel last night.

Obama will not be coming to Israel when he visits Cairo next week. However, he told Netanyahu that he did intend to visit Israel at some point during his term, though he did not make any promises as to when.

Meanwhile, Vice Prime Minister Silvan Shalom reiterated yesterday that Netanyahu's government does not intend to establish new settlements, but will accommodate "natural growth" in existing settlements.

With regard to Iran's nuclear program, Shalom said he was pleased by the outcome of the Obama-Netanyahu meeting. "It's now clear that the Americans will act, though we don't know how," he said.