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Barak sees Israel ceding Arab neighborhoods in East Jerusalem
By Reuters

Some Arab neighborhoods in Jerusalem could become the capital of a future Palestinian state as part of a final peace agreement, Minister Ehud Barak said in an interview broadcast yesterday. Barak did not say whether these neighborhoods would include all of Arab East Jerusalem, which Israel captured in the 1967 Six-Day War.

"We can find a formula under which certain neighborhoods, heavily-populated Arab neighborhoods, could become, in a peace agreement, part of the Palestinian capital that, of course, will include also the neighboring villages around Jerusalem," Barak told Al Jazeera television.
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U.S.-sponsored peace talks were launched last November by Prime Minister Ehud Olmert and Palestinian President Mahmoud Abbas with the goal of reaching an agreement in 2008. But the negotiations have been marred by violence and disputes.

"I'm not sure whether the gaps are close enough," Barak said when asked if a deal was possible this year.

The talks have been thrown into further doubt by Olmert's announcement that he would step down as prime minister once Kadima party elects a new leader later this month.

Olmert and some of his closest advisers have hinted in the past that Israel would consider turning over outlying Palestinian neighborhoods of Jerusalem in a future deal.

As prime minister in 2000, Barak led Israel's delegation at the Camp David peace talks that collapsed and were followed by the second intifada.
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