U.S. Secretary of State Condoleeza Rice is expected to meet with PM Ehud Olmert in Jerusalem on Thursday as part of her scheduled trip to the region.

Rice will be arriving in the region on Thursday with US President George W. Bush and is slated to meet with King Abdullah of Jordan later that day.

Rice was not planning on visiting Israel during the trip, but due to the atmosphere created by the Palestinian ceasefire and Olmert's Sde Boker speech, she has decided to come to Israel in order to take advantage of the diplomatic opportunities created.

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US envoy Elliot Abrams will meet with Olmert on Tuesday afternoon to plan the Thursday meeting.

Palestinian Authority Chairman Mahmoud Abbas is expected to meet on Tuesday with King Abdullah of Jordan and on Wednesday he is expected to meet with US Secretary of State Condoleeza Rice.

Rice's visit has raised hopes of a regional summit, but diplomatic sources said on Monday that they are not aware of any proposed summit that would bring together regional heads of state.

Sources stated that although Bush does have an interest in holding such a conference, he is coming to the region because of issues dealing with Iraq.

Olmert recently expressed his intentions to meet with Abu Mazen, but added that he doesn?t plan on releasing Palestinian prisoners without first securing Gilad Shalit's release.

A day after a cease-fire between Israel and the Palestinians largely went into effect and hours after Prime Minister Ehud Olmert laid out a new initiative for talks with the Palestinians, the United States said Monday it saw potential for reviving the Arab-Israeli peace process.

"I think this [speech by Olmert], combined with the announcement of a cease-fire, is certainly welcome developments, certainly potentially promising," said State Department spokesman Sean McCormack.

"Our role is to try to help the parties see how they can surmount those obstacles and to bring in neighbors in the region who have an interest in seeing the parties get back to a political horizon," McCormack said, adding that the United States viewed Olmert's speech as "constructive."

Speaking at the grave of Israel's first premier, David Ben-Gurion, in Sde Boker, Olmert said Monday that the release of Israel Defense Forces soldier Gilad Shalit, held since June by Gaza militants, would lead to the release of numerous Palestinian prisoners in Israeli jails.

"With Gilad Shalit's release and his return safe and sound to his family, the Israeli government will be willing to release many Palestinian prisoners, even those who have been sentenced to lengthy terms," Olmert said.

The prime minister said that he was extending his hand in peace to the Palestinians, and that he hoped his offer would not remain unanswered. (Click here for Olmert's full speech)

"I hold out my hand in peace to our Palestinian neighbors in the hope that it won't be returned empty," Olmert said.

"We cannot change the past and we will not be able to bring back the victims on both sides of the borders," he said. "All that we can do today is stop additional tragedies."

He called on the Palestinians to renounce violence and give up the insistence on the refugees' right of return to territory within Israel's borders, which has long been a major sticking point in peace negotiations.

"You, the Palestinian people, in the south and east, in the Gaza Strip and Judea and Samaria, stand, these very days, on the threshold of an historic crossroads," he said.

If the Palestinians did decide to choose peace talks, Olmert promised, Israel would quit large swathes of the West Bank, ease checkpoints and release frozen funds to Palestinians.

"We will agree to leave large territories and dismantle settlements that we established," he said. "We will be willing to do this in exchange for real peace."

Israeli officials denied the possibility of a summit between Palestinian Authority Chairman Mahmoud Abbas and Olmert on the sidelines of U.S. President George W. Bush's visit to neighboring Jordan later this week. Olmert spokeswoman Miri Eisin said the sides were discussing when the leaders would meet, but no date had been set.

Chief Palestinian negotiator Saeb Erekat said the Palestinians were ready to negotiate a final peace deal.

"I believe Mr. Olmert knows he has a partner, and that is President Abbas. He knows that to achieve peace and security for all, we need to shoot for the end game," Erekat said.

As a first step, Erekat said, the two sides need to sustain the fragile cease-fire along the Israel-Gaza border and also extend it to the West Bank.

"That will open the key to a political horizon," he said.

Report: Olmert, Abbas to meet Rice
Israel Radio on Monday quoted Voice of Palestine Radio as saying that Olmert, Abbas, and U.S Secretary of State Condoleezza Rice would soon meet in a three-way summit.

According to Israel Radio, Voice of Palestine also said that Britain had proposed to Israel and the PA that British observers be deployed on the Israel-Gaza Strip border to safeguard the truce that went into effect on Sunday.

Rice is to arrive Wednesday with Bush in Jordan to take part in a conference on democracy and development called by King Abdullah, and to meet with Iraqi Prime Minister Nuri al-Maliki. The original plan called for a trip to the region to focus on the Iraqi issue, but now it appears that Rice will be devoting time to Israel and the Palestinians as well.

Jordan-based units of the Palestinian Liberation Army, the armed wing of the Palestine Liberation Organization, may be sent to the Strip to help enforce the cease-fire, Voice of Palestine was further quoted as saying.

Government sources in Jerusalem said Sunday they believed Rice would visit Israel and the Palestinian Authority this week as an expression of U.S. support for the Gaza cease-fire.

Olmert said Sunday during a trip to the Negev, "The state of Israel is so strong that it can allow itself to hold back, to give a real chance to the cease-fire. After all, a cease-fire is not the supreme goal. It is only a stage in the process, which we hope will create the dynamic that will lead to negotiations and dialogue, and perhaps will finally bring about an agreement between us and the Palestinians."

An intermediary between Hamas and Fatah, Ziad Abu-Amar, told Haaretz the Palestinian factions would soon begin to discuss expanding the short-term cease-fire, or tahadiyeh, to the West Bank.

Abu Amar also said Abbas had asked the factions to "calm down" their activities in the West Bank, so as to allow a cease-fire agreement to be extended to that area as well. A spokesman for the Palestinian government, Razi Hamed, confirmed to Haaretz that the organizations do intend to examine this option.

PM: Cease-fire is not the supreme aim
Olmert said Sunday during a visit in the Negev that "the State of Israel is so strong that it can allow itself some restraint in order to give a chance to a cease-fire."

"All of these things ultimately could lead to one thing - the opening of serious, real, open and direct negotiations between us," Olmert said. "So that we can move forward towards a comprehensive agreement between us and the Palestinians."

Olmert also said that Israel would display "patience and restraint" in the face of Palestinian violations of a cease-fire that went into effect earlier in the day.

"Even though there are still violations of the cease-fire by the Palestinian side, I have instructed our defense officials not to respond, to show restraint, and to give this cease-fire a chance to take full effect," he said during a ceremony at a high school in the Bedouin town of Rahat, adding "the government of Israel will not miss this opportunity for calm."