The Palestinian Authority has told the U.S. administration that an Israeli commitment to continuing the freeze on settlement construction must include East Jerusalem.

During preparatory talks ahead of the summit due in Washington next week, the Palestinians made it clear they refuse to accept any softer formula on the building freeze. They expect that even after the September 26 deadline, when the 10-month moratorium ends, the United States will support their demand to continue the ban on all construction outside the Green Line, including in the settlement blocs.

The Palestinian negotiating team, headed by Saeb Erekat, delivered to the Americans an opinion prepared by Israeli jurists. The Palestinians say this paper proves that Prime Minister Benjamin Netanyahu's claims that the government has no authority to freeze construction on private land are unfounded.

A source familiar with the exchanges with the United States said last night that for now the Americans have not changed their attitude regarding the building freeze. The source says the Americans are not inclined to adopt the compromise proposed by Deputy Prime Minister Dan Meridor that would see construction continue in large settlement blocs but not in isolated settlements.

Another recycled proposal was made by Foreign Minister Avigdor Lieberman: to allow settlement construction based on natural growth.

The source expressed the hope that U.S. President Barack Obama will be able to convince Abbas to soften his stance on Meridor's proposal. This would come in return for an American agreement to take steps on the ground that would improve the Palestinians' quality of life.

Among the steps being considered is the transfer of land from Area C, which is under Israeli control, to Area B. This would assist in efforts by Palestinian Prime Minister Salam Fayyad to build institutions for an independent state.

A senior Israeli political source told Haaretz last night that in recent talks with most ministers from the Likud party, it is clear that if Netanyahu proposes unprecedented compromises on a settlement freeze and continues pulling out from most of the territories, he will enjoy broad support from the party leadership.

At the same time, ministers from the Labor Party are applying pressure on party chairman Ehud Barak to leave the coalition if Netanyahu turns toward the extreme right and clashes with Obama next month.