Prime Minister Ehud Olmert and US Secretary of State Condoleezza Rice discussed the situation in the Caucasus and its implications for the Middle East on Tuesday, the same day Russia formally recognized the breakaway Georgian territories, thereby increasing tensions with the West. According to diplomatic sources, Rice and Olmert discussed the impact the war in Georgia, and its aftershocks, would have throughout the region. One point of concern in Jerusalem is whether as a result of the tension with the West, Russia would stop cooperating with the US and Europe on halting Iran's nuclear development. Olmert and Rice met at the Prime Minister's residence privately for an hour. Diplomatic officials said after the meeting that Israel had not yet decided how to react to Moscow's decision to recognize South Ossetia and Abkhazia. The US sharply condemned the move, which was also criticized by Britain, France and Germany. A discussion on the matter is expected Wednesday in the Foreign Ministry. One diplomatic official, however, said that it was likely that Israel would not react to the events. "We are not a superpower," the official said. "We don't have to respond to every event in the world." In addition to the Caucasus and Iran, Olmert and Rice also discussed the negotiations with the Palestinians. After the meeting, Olmert's spokesman Mark Regev said Olmert remained determined to reach an agreement with the Palestinians by the end of President George W. Bush's term in late January. "The Prime Minister reaffirms his commitment to the goals of Annapolis, and his commitment to continue to work for a historic agreement, with the target being before the end of the Bush administration," Regev said. Rice, at a press conference in Ramallah after meeting Palestinian Authority President Mahmoud Abbas, also said she still hoped that an agreement would be inked by the end of the year. However she left Israel Tuesday evening, following a brief 24-hour visit, without any sign of a breakthrough or an imminent release of any kind of joint Israeli-Palestinian document. "God willing, and with the good will of the parties and the tireless work of the parties, we have a good chance of succeeding," Rice said at the press conference. "We still have a number of months before us to work toward the Annapolis goal and we're going to do precisely that," she said. Abbas, however, was less upbeat, indicating it was clear that the negotiations would spill over into the term of the next US president. "We shouldn't lose another seven years searching for solutions. We hope the new administration will continue what we have begun, and what we have reached," he said. "These efforts haven't been for nothing. We would have stopped it if it was pointless. There are benefits that I hope will show in the future," he added. Like Foreign Minister Tzipi Livni, who has come out against a US idea of drafting an interim document that would chart the points of agreement between the two sides at this time, Abbas also came out publicly Tuesday against the notion. "We have discussed the importance of reaching complete and comprehensive solutions, not partial solutions," Abbas said. Before meeting with Abbas in Ramallah, Rice led a trilateral dialogue with Livni, chief PA negotiator Ahmed Qurei and their respective teams. Rice was joined by Elliott Abrams, the White House's deputy National Security Adviser, and David Welch, the assistant secretary of state for Near East Affairs. The presence of Abrams and Welch, according to one US official, signaled that the US viewed this trip not as some kind of "swan song," but as part of a significant effort to nail down an agreement in the Bush administration's remaining four-and-a-half months in office. Prior to the trilateral meeting, Rice held a press conference with Livni, and - when asked about the recent Peace Now report that building beyond the Green Line was significantly on the rise - responded that it was "no secret" that "I don't think the settlement activity is helpful to the process, that in fact, what we need now are steps that enhance confidence between the parties. And anything that undermines confidence between the parties ought to be avoided." Livni, who urged the Palestinians not to let the negotiations be derailed by outside "noise," said that "at the end of the day, the Israeli government policy is not to expand settlements; it is not to build new settlements, not to confiscate land from Palestinians. "And, according to my knowledge, settlement activities have been reduced in the most dramatic way, especially in areas which are on the other side of the security fence. There were some small activities that are not going to influence the future borders of the Palestinian state." AP contributed to this report.