Israel would "not dismiss" an Arab diplomatic initiative that talks about normalization of relations, Palestinian statehood within the pre-1967 lines and the right of refugee return as the opening of a negotiating process and not as a take-it-or-leave-it deal, senior Israeli officials said Sunday. "We would not reject this out of hand," one official said. "This would challenge Israel and cause a serious discussion here." These comments came as both US Secretary of State Condoleezza Rice and UN Secretary-General Ban Ki-moon held high level talks with Palestinian and Israeli officials on a wide variety of issues, including greater involvement of the moderate forces in the Arab world in moving the diplomatic process forward.
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Rice met Prime Minister Ehud Olmert for dinner at his Jerusalem residence - after meeting earlier with Palestinian Authority Chairman Abbas in Ramallah and with Ban in Jerusalem - and Israeli officials said the Arab League summit in Riyadh on Wednesday and Thursday was high on the agenda.
The three-hour meeting ended at 11 p.m., and neither side released any details.
Rice is scheduled to travel to Jordan on Monday for a meeting with King Abdullah II, and will also meet with Abbas in Amman. She will then return to Israel and hold another meeting with Olmert, leaving a distinct impression she will be passing messages between the sides.
While Israel made clear after the establishment of a PA unity government earlier this month that it would not engage in "political horizon" talks with Abbas, Rice has said that she would do so.
Following her meeting with Abbas on Sunday, Rice said it was important for Israel and the Palestinians to establish a "common agenda" to move forward on creating a Palestinian state.
"I think this time it is best to talk about that political horizon in parallel. But I sincerely hope in the future the parties themselves can talk about the political horizon themselves," she said.
All parties need to have a "destination in mind" to solve the Israeli-Palestinian conflict, Rice said at a joint news conference with Abbas. But she conceded the sides were far apart and offered no specific proposals.
Abbas aides said the two also explored ways to get moderate Arab states involved in Israeli-Palestinian peace-making.
Regarding the Arab diplomatic initiative, Rice said in Washington on Friday she hoped it "would be offered again, and offered in a way that suggests that there might be active follow-up to the initiative, not just to say here's an initiative, but to at least begin to discuss and think about how it might be actively followed up so that it becomes a part of supporting an end to the Palestinian-Israeli conflict now."
The Arab League is scheduled to recommit in some form to the 2002 Arab peace initiative that called for normal ties with Israel in exchange for a full withdrawal to the pre-Six Day War lines and a resolution of the refugee question along the lines of UN General Assembly Resolution 194.
That resolution reads that "the refugees wishing to return to their homes and live at peace with their neighbors should be permitted to do so at the earliest practicable date, and that compensation should be paid for the property of those choosing not to return and for loss of or damage to property."
While there have been voices in the Bush administration favoring a regional conference on the basis of the Arab League initiative, Israeli officials said Jerusalem was not excited about that prospect, and instead favored bilateral negotiations with the Saudis and other moderate Arab states.
Israel has traditionally balked at large regional conferences, arguing that the fact that Israel would stand alone against a wide array of Arab countries would place it at a distinct disadvantage.
"If they come up with something creative in Riyadh, we would respond more positively to bilateral tracks and overtures than to regional ones," the official said.
The official said that since Hamas's involvement in the PA government precluded Israel from talking to it about final-status issues like borders, Jerusalem and refugees, it could instead talk about these issues with the Saudis, who would perhaps have a degree of influence on the Palestinians.
These types of issues are now being discussed with the Egyptians and Jordanians, and the official said that Israel would like to see the Saudis enjoy a similar status.
Israel received backing on Sunday for its policy of boycotting Hamas from UN Secretary-General Ban, who, during a visit to Ramallah where he met Abbas, said the time was "not yet fully ripe" to meet with Hamas officials. Ban met with non-Hamas members of the new PA cabinet, something that Rice did not do.
"At this time, I do not have plans to meet with Prime Minister Haniyeh or other Hamas cabinet ministers," Ban said, expressing hope the new government's actions would "show a genuine commitment to the basic principles... of peace."
Ban said the Palestinians should release kidnapped Cpl. Gilad Schalit, and that this was something that would be "strongly welcomed by the international community."
Ban, who visited Israel once before, as South Korea's foreign minister in 2005, is scheduled to meet with Olmert on Monday morning, followed by a press conference.
He will then go Yad Vashem, followed by separate meetings with acting President Dalia Itzik, Vice Premier Shimon Peres, Likud head Binyamin Netanyahu and Foreign Minister Tzipi Livni.
On Sunday, Ban started his day visiting the Aida refugee camp near Bethlehem and inspecting the separation barrier.
"This has strengthened my resolve and commitment to work for peace in the Middle East," Ban said. "This is a very sad and tragic thing to see many suffering from the construction of this wall, depriving opportunities for basic living."
Ban later met with parents of some of the more than 9,000 Palestinian security prisoners held by Israel, and laid a wreath at Yasser Arafat's grave in Ramallah.
AP contributed to this report