US Secretary of State Condoleezza Rice met Syrian Foreign Minister Walid Muallem Thursday during a regional conference in Sharm e-Sheikh in the first high-level talks between the two countries in years.
Government sources in Jerusalem said there was nothing in the talks that needed to concern Jerusalem.
According to these officials, the reason for the talks was the legitimate US concern over Iraq, and Israel doesn't see anything negative in the US wanting to talk about issues like Iraq and Islamic radicalism with Syria.
Asked if there was any concern that the US would be open to paying for Syrian cooperation on Iraq in Israeli currency, one senior official said, "Not this US administration."
But the official admitted that the meeting did represent a change in US policy, which for the last few years had been to isolate Damascus. The official said Israel was "not taken by surprise" by the meeting.
"They tried to ostracize Damascus, and that didn't work," the official said. "So now they are meeting, but this does not represent negotiations."
The official said the meeting would not change Israel's position toward talks with Syria, which is that there was no reason in entering negotiations with Syria until Damascus stopped actively supporting Hamas and Hizbullah, and kicked out the terrorist organization headquarters - including those of Hamas - based in Damascus.
A US military spokesman in Baghdad said ahead of the Rice-Muallem meeting that Syria had taken action on stemming the flow of foreign fighters into Iraq - a chief demand of the United States.
"There has been some movement by the Syrians," Maj.-Gen. William Caldwell told a news conference. "There has been a reduction in the flow of foreign fighters into Iraq" for more than a month.
The Bush administration has shunned Syria, accusing it of fueling tensions in Iraq and Lebanon. It sharply criticized a visit to Damascus last month by House Speaker Nancy Pelosi. But the White House has been under pressure to open dialogue with Syria and Iran.
Still, a substantive US-Iran meeting appeared less certain. The Iraqi government is pressing for Rice and Iranian Foreign Minister Manouchehr Mottaki to hold talks during the gathering, saying Washington's conflict with Teheran is only fueling the instability in Iraq.
Rice and Mottaki "exchanged pleasantries" over lunch, Egyptian Foreign Minister Ahmed Abul Gheit said. "They said hello, that's about it," US State Department spokesman Sean McCormack said.
Both the US and Iran had also spoken favorably of a possible meeting, but the chances for that remained unclear, and neither side had commented publicly on any immediate arrangements.
Rice and Muallem were seen by journalists entering bilateral talks on the sidelines of Thursday's conference.
Earlier, Muallem had confirmed the two would meet, and a senior US State Department official said they would discuss "Iraqi security issues."
Baghdad and the US hope Thursday's and Friday's conference of nearly 50 nations will rally strong international support - particularly from Arab nations - for an ambitious plan to stabilize war-torn Iraq.
Iraqi Prime Minister Nouri al-Maliki opened the conference by urging all countries to forgive his country's enormous foreign debts - estimated at approximately $50 billion. Another $100b. has already been written off by the Paris Club of lender nations.
But Saudi Arabian Foreign Minister Saud al-Faisal made no immediate public pledge, saying only that his country was in talks with Iraq and would consider such forgiveness.
Faisal told the conference his country "has expressed its readiness to alleviate some of the debts on Iraq" and was currently in discussions with Iraqi officials to deal with the issue, "in line with the regulations and bases of the Paris Club."
Iraqi and US officials had said Saudi Arabia privately had already committed to forgiving 80 percent of Iraq's $17b. debt to it.
Signs of new tension between Iraq and Saudi Arabia emerged in the lead-up to the conference when Saudi King Abdullah turned down a request to meet with Maliki. The US said it wished Abdullah had met with Maliki.
The conference aims in part to overcome differences between Maliki's Shi'ite-led government and Sunni Arab nations. Baghdad is pressing for forgiveness of debt and for Arabs to take greater action to prevent foreign fighters from joining the Iraqi insurgency.
Arab countries, in turn, demand that his government enact reforms - also sought by the US - to ensure greater participation by Sunni Arabs in Iraq's political process.
Faisal, addressing the conference, renewed a Saudi offer of $1b. in loans to Iraq, on the condition that the money be distributed equally among "Iraq's geographical sectors." He also repeated calls for political reforms.
Maliki pledged to institute reforms to boost Sunni participation, but said forgiving Iraq of its debts was the only way the country could embark on much needed reconstruction projects.
"We call on all the friends and brothers participating in this conference to forgive Iraq all its debts in order to enable it to start the projects," he said.
But there were divisions even within the Iraqi delegation to the conference. Iraqi Planning Minister Ali Baban, a Sunni, said there should be "agreement among Iraqis" and implementation of the reforms "before any international agreement."
Rice's meeting with Muallem was the first such high-level talks since the February 2005 assassination of former Lebanese prime minister Rafik Hariri. Syria denies it had anything to do with the killing, but US and European officials have since shunned the Damascus government.
Meanwhile, the White House announced Thursday that Vice President Dick Cheney will travel to the Middle East next Tuesday, with stops in the United Arab Emirates, Saudi Arabia, Egypt and Jordan. He will be meeting heads of state to discuss bilateral issues. Cheney will also meet with US military commanders and speak with US troops stationed in the Persian Gulf region.
Hilary Leila Krieger contributed to this report.