Prime Minister Ehud Olmert on Sunday told ministers during the cabinet's weekly meeting in Jerusalem that efforts to schedule a meeting with Palestinian Authority Chairman Mahmoud Abbas have broken down.

Aides in the prime minister's office quoted Olmert as saying Abbas is demanding the release of Palestinian prisoners as a condition for holding the meeting. Olmert said there would be no prisoner release until Hamas-linked militants in the Gaza Strip release Israel Defense Forces soldier Gilad Shalit, captured in June.

"We offered to meet with Abu Mazen, but apparently he is not interested," Olmert was quoted as saying during a meeting. "He is conditioning a meeting on the release of prisoners and we will not release any prisoners until Gilad Shalit is released."

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Chief Palestinian negotiator Saeb Erekat, an aide to Abbas, said preparations for a meeting between the leaders were continuing.

Olmert's chief of staff, Yoram Turbowicz, met Erekat earlier this month to discuss the summit, but no date for a meeting was announced.

Abbas and Olmert last met, informally, in June, days before Israel began an offensive against militants in the Gaza Strip after the soldier was seized.

Peretz to meet with settlement leaders on outpost evacuations
Defense Minister Amir Peretz told ministers Sunday that he planned to meet with settlement leaders to discuss the possibility of a voluntary evacuation from illegal outposts in the West Bank.

"The matter of evacuating illegal outposts has not lost importance on the public's agenda, but was given a long rest during the war in Lebanon," he said, adding that U.S. Secretary of State Condoleezza Rice had raised the issue with him on her last visit to Israel.

Peretz also said that the IDF's activities in Gaza had been significantly expanded to target Hamas activists directly. In the last few days, 12 Palestinian militants were killed in IDF operations in Gaza. Peretz said the IDF would continue targeting tunnels used for smuggling, including those in houses.