, JERUSALEM, June 2 – Israeli Prime Minister Ehud Olmert held talks with Palestinian president Mahmud Abbas on Monday ahead of a US trip that will give him a brief respite from corruption allegations against him at home.
The meeting took place one day after Israel enraged the Palestinians by announcing it will build hundreds more houses for settlers in annexed Arab east Jerusalem.
But Olmert’s spokesman Mark Regev was upbeat after the two-hour meeting.
"I can say unequivocally that there was progress reached at this meeting today," he told journalists.
"They discussed a range of issues. They reviewed the progress of the negotiations and the two leaders reiterated their commitment to try to reach a historic agreement by the end of the year," he said.
Just before the meeting, Abbas said he would take up the settlements issue, among the thorniest in the slow-moving peace efforts.
"We have drawn the attention of Israel and the international community to the fact that if Israel does not stop the settlements it will be difficult to reach a political accord," Abbas told journalists after meeting German Foreign Minister Frank-Walter Steinmeier.
Following the meeting with Abbas at his official residence in Jerusalem, Olmert was due to head to Washington, the main sponsor of the peace negotiations relaunched amid great fanfare last November.
The negotiations have produced hardly any tangible results so far and could be severely affected by the political crisis in Israel, amid growing calls for Olmert to step down over the corruption allegations.
Olmert, 62, is accused of unlawfully taking large sums of money from a US millionaire before becoming premier in 2006, although he denies any wrongdoing.
But a senior Israeli official stressed that Abbas made it clear "he is ready to go on with the process despite Olmert’s problems."
Abbas and Olmert last met on May 5. Israel at the time reported "significant progress" on the issue of the future borders of a Palestinian state but Palestinian officials played down the assessment.
Abbas made it clear on Monday that Jewish settlements in east Jerusalem and the rest of the occupied West Bank were still a major sticking point.
"We will never accept the continuation of settlements, which is the main obstacle to peace," Abbas said shortly before the talks.
Israeli authorities announced on Sunday that they are to build 884 houses in the Har Homa and Pisgat Zeev settlements in east Jerusalem.
Israel occupied and annexed the city’s eastern sector after the 1967 war in a move not recognised by the international community or the Palestinians, who want it as the capital of their promised state.
As the meeting was under way, about 30 right-wing Israeli protesters gathered outside the prime minister’s residence holding up banners that read: "Jerusalem is not for sale."
"A corrupt person does not have a mandate to decide Jerusalem’s fate," said far-right MP Effi Eitan. Asked about the peace talks, he asked: "Peace with whom? Murderers? Hamas?"
The Islamist Hamas movement that has controlled the Gaza Strip since ousting troops loyal to Abbas last June called the talks "a farce."
Hamas, which won an upset victory in 2006 Palestinian parliamentary elections, accused Abbas of "lending legitimacy" to the Israeli settlements by meeting Olmert one day after the new projects were announced.
Israeli authorities have insisted the new settlement activity does not affect the peace process as it is planned in areas that Israel expects to retain in any peace agreement.
Olmert, meanwhile was to fly on Monday night to Washington, where he will meet US President George W. Bush.
The US administration, which hopes a Middle East peace accord can be reached before the end of Bush’s term in January, has played down the impact of Israel’s political crisis on the negotiations.