Prime Minister Ehud Olmert rejected, during his visit to the United States last week, a proposal by Secretary of State Condoleezza Rice that Israel negotiate a permanent settlement with Palestinian Authority Chairman Mahmoud Abbas.

Rice supports talks on a "shelf agreement" that would outline the permanent settlement but not be implemented immediately because of Abbas' weak standing.

In Rice's view, merely reaching such an agreement in principle would provide the Palestinians with a "political horizon" and hope, thereby encouraging them to fight terror and to establish governing institutions in preparation for an independent state.

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Foreign Minister Tzipi Livni shares Rice's approach, but Olmert is strongly opposed to the idea. He believes that any settlement reached should be implemented, and fears a situation in which Israel approves the agreement, but Abbas fails to sell it to the Palestinian public. In that event, Israel might be pressured to make further concessions to make Abbas' task easier.

Olmert agreed several months ago to launch talks with Abbas over "a political horizon," on condition that these deal not with the three core issues - Jerusalem, permanent borders and the refugees - but only with the nature of the future Palestinian state, its systems of government and law and security arrangements for the territories. Political sources in Jerusalem say that as Abbas becomes stronger and more able to sell the agreement to his people, Israel will agree to expand the discussion agenda to include the core issues.

The disagreement between Rice and Olmert was evident at the White House lunch meeting given by President George W. Bush for Olmert and senior U.S. and Israeli aides. As published previously in Haaretz, Rice talked about the importance of giving the Palestinians hope, "so that a Palestinian boy doesn't want to commit suicide when he grows up." Olmert countered that Israel has paid a price for its mistakes in negotiating with the Palestinians, and spoke about the horrific suicide bombings he saw in Jerusalem after the failed summit at Camp David and the outbreak of the Al-Aqsa Intifada in 2000.