Israel has promised the United States that it will reexamine a decision made last summer to confiscate East Jerusalem property owned by Palestinians, who have been cut off from their land by the separation fence. The Americans expressed concern about the expropriation of land, which was reported in Haaretz two weeks ago.

In response to this concern, Israeli officials said that they understood the sensitivity of the matter and promised to take another look at the government decision. Local government sources said they expected that U.S. Secretary of State Condoleezza Rice will be bringing up the issue today at her meeting in Washington with Prime Minister Ariel Sharon's envoys, attorney Dov Weisglass, political adviser Shalom Turgeman, Israeli ambassador to the U.S. Danny Ayalon and the premier's military secretary, Major General Yoav Galant.

The main subject of the meeting - in advance of Rice's trip to Israel and the Palestinian Authority next Sunday - is the political process with the Palestinians and the planned summit between Sharon and Palestinian Chairman Mahmoud Abbas the following Tuesday. Israeli sources said they expect Rice will probably also visit Iraq.

The Weisglass team will present Rice, who is expected to be joined by National Security Adviser Steven Hadley, with Israel's suggestions for confidence-building measures to help Abbas: These include handing over West Bank cities to the Palestinians, release of hundreds of Palestinian prisoners and detainees and more freedom of movement for Palestinians.

The Americans, meanwhile, seek to establish a mechanism supervised by the CIA to sustain the emerging security cooperation between Israel and the PA, even if there are terrorist attacks by organizations trying to disrupt the process.

Defense Minister Shaul Mofaz is also slated to meet with senior PA official Mohammed Dahlan today or tomorrow, to continue discussing the hand-over of five West Bank cities: Ramallah, which will apparently be the first, Bethlehem, Qalqilyah, Tul Karm and Jericho.

Israel is worried that the PA security forces in the West Bank, unlike those in the Gaza Strip, have been completely debilitated in the last four years and are not prepared right now to take over the cities as Israel is proposing. Dahlan, who is expected to be named a minister in the new Palestinian government - possibly with responsibility for coordinating the disengagement from Gaza and the northern West Bank with Israel - is supposed to bring a detailed security plan to Mofaz at their meeting. Mofaz, in any case, said yesterday that he thinks the cities can be handed over in a matter of days.

In the cabinet yesterday, after Mofaz delivered a report on his meeting on Saturday night with Dahlan, a dispute broke out between Health Minister Danny Naveh and Minister without Portfolio Haim Ramon, over Palestinian requests that Tawfik Tirawi, head of the PA's General Intelligence Service in the West Bank, and Rashid Abu Shbak, the Preventive Security chief in Gaza, be dropped from Israel's list of wanted men. Naveh said it would be wrong to legitimize such terror suspects so quickly, while Ramon argued in favor of a mass release of prisoners as a way to help shore up the new Palestinian leadership's credibility.

In another development, Talia Sasson, the Justice Ministry attorney who was instructed by Sharon to prepare a report on illegal outposts, has given Weisglass and Attorney General Menachem Mazuz copies of her report. The final draft will only be given to Sharon in about two weeks, after various ministries are able to comment on her findings. She investigated how the illegal outposts were financed, and how they managed to avoid being dismantled through the use of existing zoning laws.

Meanwhile, reports from Davos, Switzerland yesterday that Foreign Minister Silvan Shalom met with Pakistan President Pervaz Musharraf were incorrect. He did, however, meet with Pakistani Prime Minister Shaukat Aziz, a former Citigroup executive who served as his country's finance minister before becoming prime minister. He is known to be friends with Israel's incoming central bank governor, Stanley Fischer.