New ME talks broached despite Gaza violence

Hopes for reviving a stalled Middle East peace plan were buoyed yesterday as Israel and the Palestinians held US-brokered negotiations and militants prepared for a new round of ceasefire talks.

The new diplomatic initiatives moved forward despite fresh violence in the Gaza Strip, where Israeli forces raided a refugee camp and killed two unarmed Palestinians.

US State Department official David Satterfield oversaw a meeting in Jerusalem yesterday between senior Israeli and Palestinian officials arranged after a weekend of intensive efforts to restart a stalled US-backed peace "road map".

US and Palestinian officials said the official reason for the talks was to find ways to ease a Palestinian economic crisis. But Israeli sources said it could also pave the way for a meeting between Israeli Prime Minister Ariel Sharon and his Palestinian counterpart, Ahmed Qurie.

"Whatever they end up discussing, the good thing is that the two sides are talking," a Western diplomat said. He cautioned, however, that expectations for significant progress were low.

Egyptian mediators, meanwhile, planned a new round of negotiations with militants today after talks in Cairo on suspending attacks against Israel collapsed last week, Palestinian sources said. A ceasefire is seen as crucial to reviving the road map.

The two-day talks, to be held in Gaza City, will involve Hamas, Islamic Jihad and other factions that have spearheaded a suicide bombing campaign during a three-year-old uprising.

Mr Qurie and Egyptian mediators had been pushing militants to accept a full ceasefire to halt all attacks on Israelis, but Hamas - which wanted Israel to reciprocate - refused. The talks broke down on December 7.

"We have not given up. We will continue to work to reach a comprehensive ceasefire," an Egyptian official told Reuters. A Palestinian source said two major-generals would head the Egyptian delegation.

US and Palestinian officials said the talks with Israel yesterday, with European donor nations attending, focused on economic issues, not the peace plan. Yet Israeli officials saw implications for the flagging peace process in the new contacts.

The Palestinian economy has been crippled by three years of Israeli military blockades, which Israel says are meant to stop suicide bombers but Palestinians call collective punishment.

Dov Weisglass, Mr Sharon's chief of staff, led the Israeli team and Palestinian chief negotiator Saeb Erekat headed the Palestinian delegation, political sources said.

Underlining the difficulties of restarting peace efforts, Israeli soldiers shot dead two Palestinians trying to sneak into Israel from the Gaza Strip and troops fought gun battles with militants during a raid into a refugee camp overnight.

The two were killed when troops fired on a group approaching Gaza's border fence with Israel, Israeli security sources said. They said the army was investigating whether the unarmed men were labourers trying to cross the border to get work.