Prime Minister Benjamin Netanyahu will ask US Mideast Envoy George Mitchell to pressure the Saudis into opening diplomatic channels and opening its skies to Israel as a leading condition towards normalization of ties between Israel and Arab states.

If this is done, the Israeli government will be able to reach an agreement on freezing construction in settlements according to American demands.

Wednesday morning Netanyahu is scheduled to meet with Senator Mitchell in London. The Americans have insisted on their demand to have settlements construction frozen, but are also talking with Palestinian President Mahmoud Abbas and other Arab leaders in order to achieve normalization steps that will promote negotiations with Israel.

Netanyahu believes that despite certain progress in talks held last week in Washington by his envoys Yitzhak Molco and Mike Herzog, in fact the conditions allowing for Israel to be asked to completely freeze settlements were yet to be created.

"There has been no breakthrough," a source from the prime minister's entourage said, adding there may be a need for further talks, possibly with US President Barack Obama.

Netanyahu believes that if settlement freeze is to be implemented, the Americans must provide in exchange normalization steps. Since Qatar and Bahrain have already expressed willingness to reexamine renewing diplomatic ties with Israel, the prime ministers believes this will serve as a lead for Saudi Arabia, that has been spearheading the Arab initiative.

The prime minister believes that the Saudis, as well as other Arab countries in the Middle East, should undertake the responsibility of opening talks with the Palestinians around the time of the United Nations' General Assembly taking place in New York on September 22.

Netanyahu is of the opinion that the most significant move the Saudis could make at this point is to open a diplomatic channel with Israel. In addition, he expects them to open their airspace to Israeli flights to the East. He also expects the Saudi leadership, like the rest of the Arab leaders, need to take steps to prepare their people for what he calls a big change.

Netanyahu reportedly also expects the Saudi leaders to support the regional peace process being led by President Obama by becoming full partners with Egypt and Jordan. Netanyahu largely sees the Saudi initiative as a welcome change. He sees the initiative also as a precondition, and not as an inclusive, final script for peace in the Middle East.

In the meantime, Jerusalem is continuing its preparations for kick-starting the peace process by concentrating efforts at the UN General Assembly in New York. Foreign Minister Avigdor Lieberman and Defense Minister Ehud Barak are expected to join Prime Minister Netanyahu on his trip there.

Israel hopes that at this juncture, during which many heads of state, including Arab states, a first meeting between Palestinian President Mahmoud Abbas and Netanyahu will be possible under Obama's patronage. Such a meeting would serve to ignite a renewed dialogue with the Palestinians and would take place in parallel with US efforts to achieve normalization between Israel and the Arab states, led by Saudi Arabia.