U.S., Israel Show New Interest In Old Peace Plan

Wednesday, March 14th 2007, 7:08 pm

By: News On 6

WASHINGTON (AP) _ The United States and Israel offered new support Wednesday for a dormant Arab proposal they hope holds promise for peace among Israel and Arab neighbors and a goad toward resolving the underlying question of a political settlement for the Palestinians.

``I hope that this speaks to the clear need for an Israeli-Arab reconciliation to accompany ... the resolution of the Israeli-Palestinian conflict,'' Secretary of State Condoleezza Rice said after a Mideast strategy session with Israeli Foreign Minister Tzipi Livni.

Rice sees the plan as a potential parallel to an Israeli-Palestinian peace drive the United States helped launch in 2003 that has also been in mothballs, as violence rose and Israel-Palestinian relations deteriorated.

``The Israelis would have their own ideas about how an Israeli-Arab reconciliation could take place, but I always think that it's a favorable matter when people are talking about resolution of long-standing conflicts,'' Rice said.

Israel rejected the plan soon after it was floated by Saudi Arabia in 2002, and still has reservations.

The plan calls for full Israeli withdrawal from areas captured in the 1967 Middle East war and the establishment of an independent Palestinian state in exchange for Israel receiving full diplomatic recognition from Arab states.

Among the Arabs, only U.S. allies Egypt and Jordan have made peace with Israel. Other governments have arms-length contact.

The main hang-up for Israel and the United States is the plan's reference to the rights of Palestinians who left land and homes when Israel was formed in 1948. Rice said she has not asked Arab governments to modify the plan, but Livni drew a firm line.

``Some parts of this initiative are positive, talking about reconciliation, normalization and such, and the other parts, those parts referring to the refugee issue, as we see it, are against the concept of the two-state solution,'' Livni said.

Also Wednesday, Palestinian political rivals Hamas and Fatah reached a final agreement on forming a coalition government, a marriage of convenience aimed at ending bloody internal fighting and lifting international sanctions.

Prime Minister Ismail Haniyeh of Hamas said after a late-night meeting with President Mahmoud Abbas of Fatah that he would present the new government to parliament this weekend.

Both sides hope the alliance will end a yearlong international boycott of the Hamas-led government. Israel, the United States and other Western countries have reacted coolly to the deal, but say they are waiting for final details before deciding whether to lift the embargo.

Abbas' surprise announcement last month that he would share power with the militants threatened to smother a renewed U.S.-backed peace push. Israel and the United States consider Hamas a terrorist group and refuse direct dealings with it. Hamas is politically powerful with roots as a militant force pledged to Israel's destruction.

The Bush administration has made progress toward an independent Palestinian state a priority for the president's remaining time in office, after years of resisting close involvement in what many saw as an intractable problem.

Despite weak or divided Israeli and Palestinian political leadership, Rice says she senses an opening for progress now. She is making frequent trips to Israel and the West Bank with few specific accomplishments to show _ the sort of spadework once considered a poor investment.

Resurrection of the Saudi-sponsored peace plan is the latest sign the United States is rethinking how to nudge the two sides closer and draw greater regional and international support to make any agreements stick. In addition to its own potential merits as a guide for peace, U.S. officials say the plan could solidify Arab support for the rest of the U.S. Mideast agenda.

The Bush administration and Israel are looking to Saudi Arabia for help with a complicated agenda that includes encouraging cooperation from divided Palestinians and a tentative outreach to Iran.

The 2002 Saudi plan is expected to be the centerpiece of an Arab summit later this month in Saudi Arabia, the region's Sunni Arab heavyweight.

Saudi Arabia, a close U.S. ally that does not recognize Israel, also drew the warring Palestinian factions together for negotiations last month and embarked on historic talks with Shiite rival Iran ahead of separate U.S. contacts with Iran last week.

Israeli Prime Minister Ehud Olmert discussed the plan during an inconclusive weekend meeting with Abbas. Olmert told his Cabinet on Sunday that he was prepared to treat the Saudi proposal ``seriously.''