SHARM EL-SHEIKH – US special envoy George Mitchell said Tuesday that the West Bank settlement construction freeze must continue, despite being a sensitive political issue in Israel.

Speaking at a press conference in Sharm el-Sheikh, Mitchell said the new round of Israeli-Palestinian negotiations was moving in the right direction, but offered no evidence of progress on the hard issue of Jewish settlements.

He clarified that the parties must continue the negotiations, which would remain discreet, adding that the direct talks were crucial for both sides.

The parties have a common goal of creating two states, Mitchell said."Our common goal remains two states for two peoples."

The Sharm el-Sheikh summit was slated to end with a joint lunch for Prime Minister Benjamin Netanyahu, Palestinian President Mahmoud Abbas, US Secretary of State Hillary Clinton and Egyptian President Hosni Mubarak, but at the last moment it was decided to continue the talks after the meal. Netanyahu and Abbas were asked to remain in the Red Sea resort for an unplanned meeting.

After the break, Netanyahu, Abbas and Clinton held another meeting. The Israeli delegation then left for the airport on its way back to Israel.

Earlier Tuesday, Netanyahu, Clinton, Abbas and Egyptian President Hosni Mubarak sat down for meetings in a bid to reach a compromise which would allow the direct talks to continue while partially lifting the West Bank settlement construction freeze.

Immediately after landing in Sharm, Netanyahu met with Mubarak, who is hosting the summit. Mubarak then met with Abbas. At the end of the separate meetings, Clinton convened Abbas and Netanyahu to try to come up with an agreed upon formula.

Both sides denied that the two-hour delay in Mitchell's press conference was the result of a crisis. Chief Palestinian negotiator Saeb Erekat told Ynet, "There is no crisis in the talks. Everything is going ahead as planned."

"President Abbas and Prime Minister Netanyahu continue to agree that these negotiations, whose goal is to resolve all core issues, can be completed in one year," Mitchell told reporters.

He said negotiations would continue on Wednesday in Jerusalem with Clinton's participation and Israeli and Palestinians teams would meet again "in the coming days" ahead of further talks at the leadership level.

"Today the parties have begun a serious discussion on core issues," Mitchell said. "President Abbas and Prime Minister Netanyahu also reiterated their intent to approach these negotiations in good faith and with a seriousness of purpose."

Echoing US President Barack Obama's position, Mitchell said: "We think it makes sense to extend the moratorium especially given that the talks are moving in a constructive direction."

Mitchell said Washington was aware "this is a politically sensitive issue in Israel" and the United States also had called on Abbas to "take steps that help, encourage and facilitate this (peace) process".

American pressure

Israel, it seems, is already assigning possible blame should this round of talks fail: "We expect the Palestinians to act responsibly," a source in Netanyahu's entourage said.

According to other sources, the prime minister was infuriated by recent Palestinians' threats suggesting the PA is on the verge of walking away from the negotiating table, and intends on demanding bbas "rein his people in."
Netanyahu intended to remind Abbas of their Washington agreement to keep the talks discreet and refrain from making vehement statements in the press – if in deed he intends to pursue peace seriously.

The Palestinian's attitude, added another source, "had led to a nine-month standstill on negotiations. The notion of 'all or nothing' led to deadlock. If the parties cannot pass the hurdle posed by the settlement freeze, how will they overcome the questions of borders and refugees?"

The difficulties noted in the negotiations so far have prompted the Prime Minister's Office to cancel a series of events planned for Tuesday, including a joint press conference in which Israel and the Palestinian Authority were to announce the official launch of their direct talks.

Clinton on Monday urged both Israel and the Palestinians to find ways to clear the "hurdle" posed by a looming expiration on the Jewish settlement construction moratorium.
But she left the door open to creative solutions, urging both sides to make reciprocal gestures that would maintain the momentum in the direct negotiations that were launched in Washington on September 2.

"We believe that the moratorium should be extended," the chief US diplomat told reporters before her plane landed in Shannon, Ireland for refuelling.