Ahmed Qurei, head of the Palestinian Authority delegation to the talks with Israel, said over the weekend that the parties have started drafting documents that could form the basis for a peace agreement.
Israel, meanwhile, downplayed the significance of drafting a document, saying it was clear that when the two sides sat down with each other, "things were being written down."
Prime Minister Ehud Olmert's spokesman Mark Regev said there was no doubt that "substantial and significant progress have been achieved in these talks, but it is also clear that much more must be done."
Regev said considerable gaps remained that must be bridged, and that although it was not impossible that an agreement would be reached by the end of the year, "much still remains to be accomplished."
As of now there was no agreed joint text, Regev said.
Qurei, a former PA prime minister also known as Abu Ala, reiterated that it would take a miracle to reach an agreement by the end of 2008. "The negotiations are very difficult," he said. "The prospects of reaching an agreement this year require a real miracle not because a solution is impossible, but due to the internal situation in Palestine and Israel."
Qurei, who was speaking to Palestinian reporters at his home in Abu Dis near Jerusalem, said all the "crucial" issues, including the future status of Jerusalem, were being discussed with Israel.
"All the issues are open for negotiations and dialogue," he said. "The fundamental issues - Jerusalem, borders, refugees, settlements, water and security - are all being discussed. This is in addition to the secondary issues that are also being discussed with Israel. All these issues are being discussed at the highest levels and through joint committees."
Qurei said the "crucial" issues were being discussed at least once a week at the highest levels and through the working committees. "We can say that the negotiations are tough and serious, but the gap between the two parties remains wide," he said. "We agreed with the Israelis that there won't be an agreement unless we agree on everything. We also agreed not to talk to the media about the details of the negotiations."
Qurei revealed that in the most recent meetings the two sides agreed to start drafting their final positions ahead of a peace agreement.
"We agreed, for example, that when we talk about land, each side would present its position on all the issues related to land," he added. "If there is an agreement on land, there would be one or two paragraphs stating that an agreement has been reached.
But if there is no agreement, we would outline the Palestinian position and the Israeli position separately and we would say that something has happened with regard to the issue, and this is what's going to happen in the future," he said.
Qurei said the parties also agreed to work toward a comprehensive agreement and not just a declaration of principles or a frame agreement that would be ambiguous. He stressed that the Palestinians had made it clear that they remained opposed to the idea of a state with temporary borders, saying they insisted on a comprehensive and just solution.
Referring to the Talansky corruption case against Olmert and its political implications for Israel, Qurei said the negotiations would continue "despite what's happening in Israel."
He said Foreign Minister Tzipi Livni had personally assured him that the negotiations would continue despite the crisis in Israel.
Qurei launched a scathing attack on the decision to build new housing units in Jerusalem and the West Bank, saying the construction was illegal. He also criticized the Americans, Europeans and Arabs for failing to pressure Israel in this regard.
One Israeli political source attributed Qurei's comments to internal divisions inside the PA over whether to begin talks with Hamas, as was proposed last week by PA President Mahmoud Abbas.
Qurei, the official said, was opposed to the reconciliation talks and wanted to show the Palestinian public that things were moving forward in the negotiations with Israel, and that there was what to be gained from continued engagement with Israel.
