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President Shimon Peres discussed the Arab-Israeli peace process on Sunday, saying, "The minute we shall start to negotiate, there won't be new settlements, there won't be confiscation of land."
Speaking at a joint press conference with Egyptian President Hosni Mubarak in Cairo, Peres added, "There will be no financial investment in new settlements. There will be a dismantling of the settlements that were established without authorization."
Settlement construction is "a marginal issue â€¦ some building of houses that became a central issue for the wrong reasons," Peres said after the meeting, adding that a resumption of talks and negotiations would bring about solutions for all disputed points.
Mubarak, however, told reporters that any construction by Israel on land beyond the 1967 borders would put a damper on "final-status negotiations" and further augment the stagnation of the peace process.
He also warned Peres that Israel would anger all Muslims if it does not resolve Jerusalem's disputed status, emphasizing that the future of Jerusalem is an issue for the entire Islamic world.
"I expressed my concern to President Peres that peace talks have not progressed since our last meeting in July and that Egypt is looking forward to an Israeli response, such as halting the building of settlements in east Jerusalem," he said.
Mubarak added that the time had passed for talk on temporary solutions and borders - which has long been seen as a stepping stone to a solving the crisis - and instead a just and lasting peace should be concluded.
"We want an end to settlement in occupied lands, including east Jerusalem," he was quoted by Reuters as saying, later calling on Israel to exhibit awareness "of the regional situation â€¦ [and] the dangers of losing the opportunity for peace."
Before leaving Cairo, Peres told reporters that there had been progress in talks to free captured IDF soldier Gilad Schalit, though he said that it was best not to go into details.
Peres echoed comments made by IDF Chief of General Staff Lt.-Gen. Gabi Ashkenazi earlier on Sunday, saying that reports on a deal to secure the soldier's release had already caused damage.
"Israel has a deep commitment to bringing Schalit home and we are making every effort to do this, but those efforts should be kept behind the scenes," he told Israel Radio.
In a Cairo address on Saturday, Mubarak said Israeli plans to "Judaize" Jerusalem, its excavations around al-Aksa Mosque and the confrontations with Palestinians were placing "new obstacles in the path to peace."
Israel's "demand to recognize it as a Jewish state and refusal to include Jerusalem in negotiations for a comprehensive agreement" were "undermining" peace efforts, Egypt's president said.
On Friday, Peres met with Prime Minister Binyamin Netanyahu to discuss the trip.
Officials in the Prime Minister's Office said the visit was completely coordinated, and described Peres as a "national asset" who had a close working relationship with Mubarak.
Greer Fay Cashman contributed to this report