Prime Minister Benjamin Netanyahu told Spanish Prime Minister Jose Luis Rodriguez Zapatero last Thursday that talks between Israel and the United States over construction in the settlements on the West Bank had ended.

"We solved the matter of the settlements with the Americans," Netanyahu told his Spanish counterpart.

"I cannot say more than that. If you are interested in hearing more details, ask in Washington," added Netanyahu.

It is not clear what Netanyahu meant and what the details of the "solution" are, but this is the first time that Netanyahu has said that the issue of the settlements, which is the main bone of contention between the Obama administration and Israel, has been solved.

Sources in Jerusalem said that Netanyahu spoke about the matter after his representatives Mike Herzog and Yitzhak Molcho reached agreements in Washington during their talks last week.

Zapatero told Netanyahu of his visit to the White House two days before his arrival in Jerusalem. He said he was obsessed with Obama, and that there will never be another chance where a man who professes values such as his will be president, and everyone must help him realize his vision.

Netanyahu responded to Zapatero, saying he was willing to start talks with the Palestinians without any pre-conditions.

"The Palestinians should talk to us already," Netanyahu said.

Spain will assume the EU presidency on January 1.

Molcho and Herzog returned last weekend after meeting with U.S. Middle East envoy George Mitchell and his staff. The central point of the discussions was the conditions for opening negotiations between Israel and the Palestinians, as well as the how the talks will be conducted, their goals and schedule for reaching an agreement.

Molcho and Herzog are expected to fly back to Washington this week for another round of talks. A Palestinian delegation headed by Palestinian chief negotiator Saeb Erekat will also be there at the same time.

Mitchell and U.S. Secretary of State Hillary Clinton will write their report to Obama after this round of talks has ended. Obama asked the two to report on the chances of the negotiations between Israel and the Palestinians, and Obama is expected to receive the report next week. After reading the report and consulting his staff, Obama is expected to make a speech announcing his next steps to advance the negotiations.