Israel and the Palestinians have agreed to resume direct negotiations for the first time in 20 months, US Secretary of State Hillary Clinton has said.

Israeli PM Benjamin Netanyahu and Palestinian Authority President Mahmoud Abbas have been invited to Washington on 2 September to start the talks.

They have agreed to place a one-year time limit on the direct negotiations.

But correspondents say prospects of a comprehensive deal are slim, as serious disagreements exist on the core issues.

Sensitive areas - including the construction of Jewish settlements on occupied territory, the status of Jerusalem, the borders of a future Palestinian state and the right of return - will be difficult to overcome.

'Obstacles'

Speaking at the state department, Mrs Clinton said President Barack Obama had been encouraged by the leadership of Mr Netanyahu and Mr Abbas, and had invited them to Washington to "relaunch direct negotiations to resolve all final status issues, which we believe can be completed within one year".

"President Obama has invited President Mubarak of Egypt and King Abdullah of Jordan to attend, in view of their critical role in this effort. Their continued leadership and commitment to peace will be essential to our success," she added.

Mr Obama will hold meetings with the four leaders, followed by a dinner with them, on 1 September. Tony Blair, the special representative of the Middle East Quartet - which comprises the US, the UN, the EU and Russia - has also been invited.

Whenever a US administration makes a formal announcement about peace talks in the Middle East, hopes are usually raised - maybe, just maybe, this time it will lead to peace. Today, however, scepticism is at an all time high.

Direct talks between Palestinians and Israelis are a significant but small step. A decade after the last real final-status talks, 20 months after the last direct talks, and after months of shuttle diplomacy by the Obama administration, Mahmoud Abbas and Benjamin Netanyahu will come to face to face for dinner and talks in Washington.

Beyond that, there is still a blank. The US special envoy, George Mitchell, said the location and timing of the next round of talks would be discussed during the Washington meetings. Hillary Clinton spoke about obstacles along the way - the first one may well be getting the two parties to agree to a second round of talks on key issues. If the Obama administration wants peace within a year, there will need to be more substance soon.

A trilateral meeting at the state department between Mrs Clinton, Mr Abbas and Mr Netanyahu will formally relaunch the direct peace talks the following day.

"As we move forward, it is important that actions by all sides help to advance our effort, not hinder it. There have been difficulties in the past, there will be difficulties ahead. Without a doubt, we will hit more obstacles," Mrs Clinton said.

"But I ask the parties to persevere, to keep moving forward even through difficult times and to continue working to achieve a just and lasting peace in the region," she added.

"These negotiations should take place without preconditions and be characterised by good faith and a commitment to their success, which will bring a better future to all of the people of the region."

The Quartet issued a statement calling for talks that "lead to a settlement... that ends the occupation which began in 1967 and results in the emergence of an independent, democratic and viable Palestinian state living side by side in peace and security with Israel and its other neighbours".

Mr Mitchell said the US would be prepared to submit bridging proposals if the two sides failed to make progress.

Mr Netanyahu welcomed the US announcement, saying that "reaching an agreement is a difficult challenge but is possible".

"We are coming to the talks with a genuine desire to reach a peace agreement between the two peoples that will protect Israel's national security interests," his office said.

The chief Palestinian negotiator, Saeb Erekat, told the BBC that the talks with the Israelis should be productive.

"They have a choice now whether to choose settlements or peace. I hope they choose peace. I hope that Mr Netanyahu will be our partner in peace... and we can do it," he said.

The Islamist group Hamas, which controls the Gaza Strip, dismissed the direct talks as a US attempt to "fool the Palestinian people". However, US officials said Hamas would have no role in them.

Shuttle diplomacy

Mrs Clinton's announcement comes after months of shuttling by US special envoy George Mitchell between Mr Netanyahu and Mr Abbas.

Officials said Mrs Clinton had also been speaking frequently on the telephone in recent days with regional leaders and Mr Blair. President Obama meanwhile held separate meetings with the Israeli and Palestinian leaders in recent weeks in a bid to break the deadlock.

Mr Abbas broke off talks with the previous Israeli Prime Minister, Ehud Olmert, in late 2008 and contacts were frozen following Israel's offensive against the militant Hamas movement in the Gaza Strip in December that year.

Indirect contacts resumed in May in the form of "proximity talks", overseen by Mr Mitchell.

But Mr Abbas resisted US overtures to resume direct talks, saying he wanted guarantees that a future Palestinian state would be based on the borders that existed before the 1967 Middle East war, and that all settlement construction in the West Bank and East Jerusalem would stop immediately.

Mr Netanyahu meanwhile insisted for many weeks that he was ready to come to the negotiating table, but without "preconditions".

These included an extension of his government's 10-month partial suspension of settlement construction in the West Bank, which is due to end on 26 September. Areas within the Jerusalem municipality were not included.

Close to 500,000 Jews live in more than 100 settlements built since Israel's 1967 occupation of the West Bank and East Jerusalem. They are considered illegal under international law, although Israel disputes this.

BBC Middle East editor Jeremy Bowen says direct talks between the Palestinians and Israel used to be routine, but this time it has taken months of hard diplomacy by the Americans to persuade the two sides to sit down together.

It will be much tougher to get Mr Abbas and Mr Netanyahu, each with their own set of domestic political complications, to make any sort of deal, our correspondent says.

But it will be a huge challenge to get them to agree on final status issues, all with security guarantees for both sides, he adds.

Source: bbc.co.uk

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