Abir Dandis, the mother of the two girls who were murdered in the Negev town of Al-Fura’a last week, couldn't find a police officer to listen to her warnings, neither in Arad nor in Ma’ale Adumim. Both police stations operate in areas where Israel wants to gather the Bedouin into permanent communities, against their will, in order to clear more land for Jewish communities. The dismissive treatment Dandis received shows how the Bedouin are considered simply to be lawbreakers by their very nature. But as a resident of the West Bank asking for help for her daughters, whose father was Israeli, Dandis faced the legal-bureaucratic maze created by the Oslo Accords.

The Palestinian police is not allowed to arrest Israeli civilians. It must hand suspects over to the Israel Police. The Palestinian police complain that in cases of Israelis suspected of committing crimes against Palestinian residents, the Israel Police tend not to investigate or prosecute them.

In addition, the town of Al-Azaria, where Dandis lives, is in Area B, under Palestinian civilian authority and Israeli security authority. According to the testimony of Palestinian residents, neither the IDF nor the Israel Police has any interest in internal Palestinian crime even though they have both the authority and the obligation to act in Area B.

The Palestinian police are limited in what it can do in Area B. Bringing in reinforcements or carrying weapons in emergency situations requires coordination with, and obtaining permission from, the IDF. If Dandis fears that the man who murdered her daughters is going to attack her as well, she has plenty of reason to fear that she will not receive appropriate, immediate police protection from either the Israelis or the Palestinians.

Dandis told Jack Khoury of Haaretz that the Ma’ale Adumim police referred her to the Palestinian Civil Affairs Coordination and Liaison Committee. Theoretically, this committee (which is subordinate to the Civil Affairs Ministry) is the logical place to go for such matters. Its parallel agency in Israel is the Civilian Liaison Committee (which is part of the Coordination and Liaison Administration - a part of the Civil Administration under the Coordinator of Government Activities in the Territories).

In their meetings, they are supposed to discuss matters such as settlers’ complaints about the high volume of the loudspeakers at mosques or Palestinians’ complaints about attacks by settlers. But the Palestinians see the Liaison Committee as a place to submit requests for permission to travel to Israel, and get the impression that its clerks do not have much power when faced with their Israeli counterparts. In any case, the coordination process is cumbersome and long.

The Palestinian police has a family welfare unit, and activists in Palestinian women’s organizations say that in recent years, its performance has improved. But, as stated, it has no authority over Israeli civilians and residents. Several non-governmental women’s groups also operate in the West Bank and in East Jerusalem, and women in similar situations approach them for help. The manager of one such organization told Haaretz that Dandis also fell victim to this confusing duplication of procedures and laws. Had Dandis approached her, she said, she would have referred her to Adalah, the Legal Center for Arab Minority Rights in Israel, which has expertise in navigating Israel’s laws and authorities.

John Kerry revealed his long-awaited plan for peace in the Middle East on Sunday, hinging on a $4bn (£2.6bn) investment in the Palestinian private sector.

The US secretary of state, speaking at the World Economic Forum on the Jordanian shores of the Dead Sea, told an audience including Israeli president Shimon Peres and Palestinian leader Mahmoud Abbas that an independent Palestinian economy is essential to achieving a sustainable peace.

Speaking under the conference banner "Breaking the Impasse", Kerry announced a plan that he promised would be "bigger, bolder and more ambitious" than anything since the Oslo accords, more than 20 years ago.

Tony Blair is to lead a group of private sector leaders in devising a plan to release the Palestinian economy from its dependence on international donors. The initial findings of Blair's taskforce, Kerry boasted, were "stunning", predicting a 50% increase in Palestinian GDP over three years, a cut of two-thirds in unemployment rates and almost double the Palestinian median wage. Currently, 40% of the Palestinian economy is supplied by donor aid.

Kerry assured Abbas that the economic plan was not a substitute for a political solution, which remains the US's "top priority".

Peres, who had taken the stage just minutes before, also issued a personal plea to his Palestinian counterpart to return to the negotiations.

"Let me say to my dear friend President Abbas," Peres said, "Should we really dance around the table? Lets sit together. You'll be surprised how much can be achieved in open, direct and organised meetings."

Thick locks hug the front gates of shuttered shops, now covered in graffiti and dust from lack of use. Only a handful of customers pass along the dimly lit road, sometimes stopping to check the ripeness of fruits and vegetables, or ordering meat in near-empty butcher shops.

“All the shops are closed. I’m the only one open. This used to be the best place,” said 64-year-old Mustafa Sunocret, selling vegetables out of a small storefront in the marketplace near his family’s home in the Muslim quarter of Jerusalem’s Old City.

Amidst the brightly coloured scarves, clothes and carpets, ceramic pottery and religious souvenirs filling the shops of Jerusalem’s historic Old City, Palestinian merchants are struggling to keep their businesses alive.

Faced with worsening health problems, Sunocret told IPS that he cannot work outside of the Old City, even as the cost of maintaining his shop, with high electricity, water and municipal tax bills to pay, weighs on him.

“I only have this shop,” he said. “There is no other work. I’m tired.”

Abed Ajloni, the owner of an antiques shop in the Old City, owes the Jerusalem municipality 250,000 Israeli shekels (68,300 U.S. dollars) in taxes. He told IPS that almost every day, the city’s tax collectors come into the Old City, accompanied by Israeli police and soldiers, to pressure people there to pay.

“It feels like they’re coming again to occupy the city, with the soldiers and police,” Ajloni, who has owned the same shop for 35 years, told IPS. “But where can I go? What can I do? All my life I was in this place.”

He added, “Does Jerusalem belong to us, or to someone else? Who’s responsible for Jerusalem? Who?”

Illegal annexation

Israel occupied East Jerusalem, including the Old City, in 1967. In July 1980, it passed a law stating that “Jerusalem, complete and united, is the capital of Israel”. But Israel’s annexation of East Jerusalem and subsequent application of Israeli laws over the entire city remain unrecognised by the international community.

Under international law, East Jerusalem is considered occupied territory – along with the West Bank, Gaza Strip and Syrian Golan Heights – and Palestinian residents of the city are protected under the Fourth Geneva Convention.

Jerusalem has historically been the economic, political and cultural centre of life for the entire Palestinian population. But after decades languishing under destructive Israeli policies meant to isolate the city from the rest of the Occupied Territories and a lack of municipal services and investment, East Jerusalem has slipped into a state of poverty and neglect.

“After some 45 years of occupation, Arab Jerusalemites suffer from political and cultural schizophrenia, simultaneously connected with and isolated from their two hinterlands: Ramallah and the West Bank to their east, West Jerusalem and Israel to the west,” the International Crisis Group recently wrote.

Israeli restrictions on planning and building, home demolitions, lack of investment in education and jobs, construction of an eight-foot-high separation barrier between and around Palestinian neighbourhoods and the creation of a permit system to enter Jerusalem have all contributed to the city’s isolation.

Formal Palestinian political groups have also been banned from the city, and between 2001-2009, Israel closed an estimated 26 organisations, including the former Palestinian Liberation Organisation headquarters in Jerusalem, the Orient House and the Jerusalem Chamber of Commerce.

Extreme poverty

Israel’s policies have also led to higher prices for basic goods and services and forced many Palestinian business owners to close shop and move to Ramallah or other Palestinian neighbourhoods on the other side of the wall. Many Palestinian Jerusalemites also prefer to do their shopping in the West Bank, or in West Jerusalem, where prices are lower.

While Palestinians constitute 39 percent of the city’s population today, almost 80 percent of East Jerusalem residents, including 85 percent of children, live below the poverty line.

“How could you develop [an] economy if you don’t control your resources? How could you develop [an] economy if you don’t have any control of your borders?” said Zakaria Odeh, director of the Civic Coalition for Palestinian Rights in Jerusalem, of “this kind of fragmentation, checkpoints, closure”.

“Without freedom of movement of goods and human beings, how could you develop an economy?” he asked.

“You can’t talk about independent economy in Jerusalem or the West Bank or in all of Palestine without a political solution. We don’t have a Palestinian economy; we have economic activities. That’s all we have,” Odeh told IPS.

Israel’s separation barrier alone, according to a new report by the United Nations Conference on Trade and Development (UNCTD), has caused a direct loss of over one billion dollars to Palestinians in Jerusalem, and continues to incur 200 million dollars per year in lost opportunities.

Israel’s severing and control over the Jerusalem-Jericho road – the historical trade route that connected Jerusalem to the rest of the West Bank and Middle East – has also contributed to the city’s economic downturn.

Separation of Jerusalem from West Bank

Before the First Intifada (Arabic for “uprising”) began in the late 1980s, East Jerusalem contributed approximately 14 to 15 percent of the gross domestic product (GDP) in the Occupied Palestinian territories (OPT). By 2000, that number had dropped to less than eight percent; in 2010, the East Jerusalem economy, compared to the rest of the OPT, was estimated at only seven percent.

“Economic separation resulted in the contraction in the relative size of the East Jerusalem economy, its detachment from the remaining OPT and the gradual redirection of East Jerusalem employment towards the Israeli labour market,” the U.N. report found.

Decades ago, Israel adopted a policy to maintain a so-called “demographic balance” in Jerusalem and attempt to limit Palestinian residents of the city to 26.5 percent or less of the total population.

To maintain this composition, Israel built numerous Jewish-Israeli settlements inside and in a ring around Jerusalem and changed the municipal boundaries to encompass Jewish neighbourhoods while excluding Palestinian ones.

It is now estimated that 90,000 Palestinians holding Jerusalem residency rights live on the other side of the separation barrier and must cross through Israeli checkpoints in order to reach Jerusalem for school, medical treatment, work, and other services.

“Israel is using all kinds of tools to push the Palestinians to leave; sometimes they are visible, and sometimes invisible tools,” explained Ziad al-Hammouri, director of the Jerusalem Centre for Social and Economic Rights (JCSER).

Al-Hammouri told IPS that at least 25 percent of the 1,000 Palestinian shops in the Old City were closed in recent years as a result of high municipal taxes and a lack of customers. “Taxation is an invisible tool…as dangerous as revoking ID cards and demolishing houses,” he said. “Israel will use this as pressure and as a tool in the future to confiscate these shops and properties.”

Palestinian policemen dispatched last week to an unruly West Bank district clashed Tuesday with Islamic militants there, wounding two of them during a crackdown that could influence peace talks with Israel.

It was the first such confrontation since 480 police reinforcements clad in black and khaki uniforms marched into the city of Jenin before thousands of cheering residents Saturday to launch "Operation Smile and Hope."

Jenin and outlying towns and villages, protected until then by a police force of 150, have been beset by criminal gangs. The area is also a base for Islamic Jihad, an armed group that poses a threat to Israel but not to the local authorities or population.

Israel, which controls much of the West Bank, permitted the police deployment as a test of the Palestinian Authority's ability to govern a would-be independent state. Israeli officials say their army will not withdraw from the West Bank until Palestinians show they can rein in groups that attack Israeli soldiers and civilians.

Tuesday's fighting in the town of Kabatiya, three miles south of Jenin, demonstrated that the police are willing to enter a stronghold of the militants and confront them, at least in self-defense.

Diyab Ali, commander of Palestinian forces in the West Bank, said police shot into a group of about 20 Islamic Jihad members who had approached a police station Tuesday trying to force the release of a detainee. Two militants were hit in the legs.

Islamic Jihad gave a different account on its website, saying its members came under fire while walking near the police station on their way to a meeting. The group has accused the Palestinian Authority of working, with U.S. assistance, in Israel's interest.

Hundreds of policemen had entered the town before dawn. In an early shootout, police said that criminals opened fire on one of their patrols and a 21-year-old university student suffered a head wound in the crossfire. He was listed in critical condition at a hospital.

The clash with Islamic Jihad followed.

Officials said 11 people have been arrested and several stolen cars seized in the crackdown since Saturday. Police have handed out leaflets to residents asking for help with identifying troublemakers. The reinforcements, who will stay for three months, are from three different police units. Some have received training in Jordan under a U.S.-funded program.

A similar deployment in the West Bank city of Nablus in September led to a sharp reduction in killings and armed robberies. But to the chagrin of U.S. and Palestinian officials, it failed to halt the Israeli army's almost-nightly raids there; Israeli officials say the police in Nablus have been less aggressive in pursuing militants who plot attacks against Israelis.

The Palestinian police operations have also been undercut by Israeli travel restrictions in the West Bank, Israel's blockage of promised supplies of body armor and helmets, and a shortage of prison space and barracks.

Saeb Erekat, a Palestinian negotiator, said the ongoing raids in Nablus have undermined Palestinian public support for the U.S.-backed peace talks, which started in November. But Israeli Defense Minister Ehud Barak said last week that "ultimate security responsibility" there and throughout the West Bank "will remain in Israel's hands."

Israeli and Palestinian negotiators began addressing the most difficult issues of their decades-old conflict Monday, keeping a promise to President Bush but putting Israel's coalition government under strain.

Israeli Foreign Minister Tzipi Livni and former Palestinian Authority Prime Minister Ahmed Korei emerged from a two-hour session at a Jerusalem hotel with little to say about what they had discussed. Israeli officials said the two lead negotiators planned to meet at least once a week.

The two sides agreed on Nov. 27 at a U.S.-sponsored international conference in Annapolis, Md., to resume full-scale peace talks after a seven-year hiatus. The aim is to agree by the end of Bush's presidency on the terms for creation of an independent Palestinian state.

But a dispute over new Jewish housing construction on land claimed by the Palestinians had stalled the talks, and it took Bush's visit to Israel and the West Bank last week to get them going.

"It was an exploratory session, and we exchanged our views on how to approach the core issues," Korei told reporters after Monday's meeting. "The talks were positive, but the path ahead is difficult."

Those issues, now on the table for the first time since a U.S.-led peace effort in the final months of the Clinton administration, include the borders of a Palestinian state, the fate of Palestinian refugees who fled what is now Israel, and conflicting claims to Jerusalem.

Livni told parliament Monday that she was prepared to make significant territorial concessions to achieve peace, but she emphasized that no land would change hands until the Palestinian Authority showed it could quell militant activity and ensure Israel's security.

The talks would be conducted quietly, away from the "glare of the cameras," she said, to avoid the grandstanding and raised expectations that "led to disappointment and violence" after the Clinton effort collapsed.

"Faced with a choice between headlines and daily drama as opposed to results, I choose results," she said.

Israeli Prime Minister Ehud Olmert also wants to limit any grounds for dissension among his supporters as the talks progress. Avigdor Lieberman is threatening to pull his right-wing Israel Our Home party from the governing coalition as early as this week to protest the mere fact that the most sensitive issues are being discussed.

Lieberman's decision could sway the ultra-Orthodox Shas Party, which opposes territorial concessions to the Palestinians. Without those two parties, Olmert's coalition, anchored by his centrist Kadima party and the left-leaning Labor Party, would lose its parliamentary majority and be forced to scramble for new partners to stay in power.

Olmert's task of sustaining support for peace talks is complicated by his vulnerability on another issue: Israel's war against Hezbollah guerrillas in Lebanon in 2006, widely seen as ending in a stalemate. An official inquiry panel's second report on his government's conduct of that war is due Jan. 30 and is likely to prompt calls for Olmert's resignation.

Bush and coalition party leaders attended a working dinner Thursday at Olmert's residence, during which the U.S. president urged them to rally behind the prime minister and the peace effort. According to participants' accounts in the Israeli newspaper Haaretz of the closed-door dinner, Bush then observed: "Israeli politics is like karate. You never know when the next chop will come."

Palestinian Authority President Mahmoud Abbas is also weakened by his secular Fatah-led administration's loss of the Gaza Strip in June to the militant Islamic movement Hamas, which calls for Israel's destruction, and his limited ability to control militant activity in his own West Bank stronghold.

In Gaza, Hamas spokesman Sami abu Zuhri told the Reuters news agency that the peace talks were aimed at providing "a cover for the occupation crimes against our people" by Israel and were doomed to fail.

President Bush completed two days of meetings with Israeli and Palestinian leaders Thursday without a firm public commitment from Israel to halt expansion of West Bank settlements or give the Palestinians a bigger role in policing the territory.

Nor did the president make progress on a key Israeli concern that has stood in the way of peace talks for years: a halt in rocket attacks on southern Israel by Palestinian militants based in the Gaza Strip.

Bush nevertheless insisted that a peace accord was possible by the end of his term, and spelled out guidelines for a deal to end what he called Israel's "occupation" of Arab lands and to create an independent Palestinian state.

Israeli officials embraced the proposals, which appeared to take the Palestinians by surprise.

A top aide said Bush would return to the region at least once before he left office in a year to gauge progress in talks on the main issues of the decades-old conflict. Spurred by Bush's visit, Israeli Prime Minister Ehud Olmert and Palestinian Authority President Mahmoud Abbas agreed Tuesday to launch those negotiations soon.

In remarks to reporters at his hotel in Jerusalem, Bush said that any accord "will require mutually agreed adjustments" to the lines drawn for Israel in the late 1940s "to reflect current realities." That position supports Israel's demand to keep large Jewish settlement clusters built near Jerusalem on land captured in the 1967 Middle East War.

But Bush also emphasized that new borders should give the Palestinians a "viable and contiguous" state.

He also suggested international compensation for Palestinians and the descendants of those who fled before the Jewish state's formation in 1948. In doing so, he implicitly rejected the long-standing Palestinian demand for refugees' "right of return" to Israel.

Bush offered no ideas for resolving conflicting claims to Jerusalem and its holy sites, the issue he said could be the toughest of all.

The president's guidelines are not new. But his national security advisor, Stephen J. Hadley, said Bush was summarizing them in an effort to guide the peace talks.

"They are consistent with understandings we have reached with his administration," Israeli government spokesman Mark Regev said. "We see this as a positive basis for moving on."

Saeb Erekat, a veteran Palestinian negotiator, said late Thursday that he had not seen Bush's statement, which was issued hours after the president visited the Palestinian leadership here.

"It's not his job to make demands and set conditions," Erekat said. "The president himself said he was not here to dictate the terms of a settlement. That's our task as negotiators."

Looking to 'road map'

Bush had set a limited goal for this visit, his first to Israel or the West Bank as president: to kick-start the peace process and nudge the two sides to start fulfilling a 2003 plan backed by the U.S. known as the "road map" in order to improve the climate for negotiations.

On Thursday he appointed Lt. Gen. William Fraser III to monitor progress on the plan, which calls for Israel to freeze settlement activity and the Palestinians to act against militant groups that attack Israel.

Putting public pressure on Israel, Bush insisted on the removal of dozens of small unauthorized settlement outposts and echoed a complaint by Abbas that Israel was undermining his nascent Palestinian security forces by continuing to conduct raids in West Bank cities.

Israel, Bush declared here during a news conference with Abbas, "ought to help, not hinder, the modernization of the Palestinian security force" so it can take over the policing of those cities and quell militant activities.

The effect of Bush's prodding will be measured in coming days. But after meeting Wednesday with Olmert and Thursday with Abbas, neither Bush nor his hosts offered any sign that his visit had overcome disputes over settlements, West Bank security and rocket attacks from Gaza, where the militant Islamic movement Hamas has ousted Abbas' secular Fatah faction.

Regev, the Israeli spokesman, defended Israel's raids. He said a three-day operation last week in the West Bank city of Nablus uncovered material for manufacturing rockets, an indication that the Palestinians' security work was failing.

"We believe we have American understanding that Israel has to act to defend itself when required," he said after Bush and Olmert held a working dinner Thursday, their second meeting in two days.

Seeking to define an achievement, Bush said in his statement that "both sides are getting down to the business of negotiating."

But he acknowledged the intractable nature of the situation in Gaza, which all sides agree would be part of a Palestinian state. "I don't know whether you can solve it in a year or not," Bush said.

Bush is the first U.S. president to call explicitly for an independent Palestinian state. But many Palestinians here viewed his visit with cynicism.

"He has brought nothing new," said Naser Farid, a 33-year-old shopkeeper. "Look what he did in Iraq. We do not expect him to help us. All he does is destroy."

"I don't see an effort to promote serious negotiations," said Mouin Rabbani, a Palestinian analyst based in Amman, Jordan, for the International Crisis Group. "The Americans' attitude is to get you in the negotiating room, close the door from the outside, cross their fingers and hope for the best."

In the role of tourist

Bush spent much of Thursday in the West Bank. He first visited Ramallah for meetings at the Muqata, the Palestinian Authority's headquarters, which six years ago Israel stood ready to destroy with bulldozers to oust Yasser Arafat. Bush then traveled to Bethlehem, playing the unfamiliar role of tourist during a visit to one of Christianity's most revered sites.

As Bush's motorcade made its way from Jerusalem to Ramallah -- a teeming city that security demands turned into a ghost town, its streets empty of pedestrians who regularly force motor traffic to a crawl -- he traveled without stopping through one of the checkpoints that have become one of many points of angry contention between Israelis and Palestinians.

Fog led Bush to abandon plans to fly in aboard his Marine One helicopter, and the drive took him through a gap in a towering cinder-block barrier. It was erected along the length of the West Bank to keep Palestinians from entering Israel without permission and has come to symbolize set-in-concrete differences.

The president made no mention of the barrier during the news conference after he and Abbas, with whom he later had lunch, met for more than an hour. But Bush was sympathetic to both the Palestinian complaints about the checkpoints and Israel's reliance on them.

"They create a sense of security for Israel; they create massive frustrations for the Palestinians,"Bush said.

"You'll be happy to hear that my motorcade of a mere 45 cars was able to make it through without being stopped. But I'm not so exactly sure that's what happens to the average person."

Bush, who rarely engages in sightseeing while traveling abroad, toured the Church of the Nativity and the grotto beneath it in Bethlehem with Secretary of State Condoleezza Rice.

The church is built over what Christians revere as the place where Jesus was born.

"For those of us who practice the Christian faith, there's really no more holy site than the place where our savior was born," he said.

And there, on Manger Square, Bush was confronted yet again with the anger and disputes at the foundation of his visit.

"No Peace with Settlements," read a banner hung from a building across the square.

As President Bush headed to the Middle East to check on their peace talks, Israeli and Palestinian leaders agreed Tuesday to launch them in earnest, six weeks late.

It was that long ago that Israeli Prime Minister Ehud Olmert and Palestinian Authority President Mahmoud Abbas stood beside Bush at an international conference in Annapolis, Md., and announced the start of full-scale negotiations with the aim of creating a Palestinian state by the end of 2008.

But the promised effort, a priority on Bush's waning agenda and a focus of his eight-day visit to the region starting here today, has been stalled by a quarrel over newly planned Jewish housing construction since the two sides' negotiators first met Dec. 12.

The Palestinians, taken aback by revelations of such plans on land in East Jerusalem and the West Bank that they seek for their state, have refused for weeks to tackle a wide range of other issues.

Prodded by the Bush administration, Olmert responded last month by ordering Cabinet ministers to seek his approval before authorizing new construction in the West Bank, which Israel captured in the 1967 Middle East War. His order did not fully satisfy the Palestinians because it did not halt projects in progress and did not apply to East Jerusalem, which Israel annexed in 1967.

Abbas nonetheless agreed Tuesday, in a two-hour meeting at Olmert's residence here, to end the deadlock and start grappling with core issues of the decades-old conflict. Those include the borders of a Palestinian state, the status of Palestinian refugees who fled homes in Israel, and conflicting claims over Jerusalem -- issues the two sides last addressed seven years ago.

Israeli government spokesman Mark Regev said negotiating teams led by Israeli Foreign Minister Tzipi Livni and former Palestinian Authority Prime Minister Ahmed Korei could begin work on those issues as early as next week.

The teams will try to resolve immediate disputes, such as the one over Jewish settlements, on a separate track, Regev said, and Olmert and Abbas will meet every two weeks to review their work.

That's essentially what the two sides agreed to start doing right after leaving Annapolis. The time lost since is an indication that progress will be difficult without significant U.S. pressure.

"When an American president comes and tries to encourage the sides to overcome the obstacles and try to solve them . . . that always helps the Palestinians and helps us move forward with the process," Israeli Deputy Prime Minister Haim Ramon said last week.

Before leaving Washington late Tuesday, Bush said he would encourage Israelis and Palestinians to make "tough decisions on complex questions." He said he was "optimistic about the prospects."

But U.S. national security advisor Stephen Hadley said he did not expect any breakthroughs during Bush's meetings today with Israeli leaders here and Thursday with Palestinian leaders in the West Bank city of Ramallah.

"Just his going there is going to advance the prospects," Hadley told reporters last week. "We're not looking for headline announcements."

Israeli and Palestinian analysts question how much progress Bush can make without a deeper personal involvement in the negotiations, especially in light of Olmert's political weakness at home and Abbas' loss of control of the Gaza Strip last year to the militant Islamic movement Hamas.

The talks have already strained Olmert's ideologically diverse coalition government. Avigdor Lieberman last week threatened to take his right-wing party, Israel Our Home, out of the government, reducing the ruling bloc's majority in parliament, if Olmert moved to negotiate on borders, refugees or Jerusalem.

Lieberman said Tuesday that he would not leave the government during Bush's visit and would meet with Olmert before making a decision.

Because the sides have yet to tackle the core issues, Bush is more likely during his visit to be drawn into peripheral feuds over Jewish settlements and Palestinian militant activity, obstacles that sour the climate for talks.

Israeli officials said Olmert would brief Bush on his plans to curb government-authorized settlement activity and dismantle dozens of unauthorized outposts in the West Bank.

Palestinian officials say Abbas will press his case for a complete freeze on Jewish housing construction on Palestinian-claimed land and a halt of Israeli army raids such as the four-day operation last week in the West Bank city of Nablus.

The two leaders sparred inconclusively over those matters during Tuesday's meeting.

"Let's make 2008 the year to reach a treaty," Palestinian negotiator Saeb Erekat quoted Abbas as telling Olmert in the meeting. "But this cannot happen if you continue to build settlements, continue with military incursions and keep putting checkpoints on our roads."

Olmert replied that Palestinian police had to do a better job of controlling militants intent on attacking the Jewish state, Israeli officials said. The Israeli army said its raid uncovered a suspected missile factory in Nablus.

"This is really a matter of concern," Regev said. "Nobody can expect us to stand by in the face of very real threats. We cannot allow a security vacuum."