U.S. envoy to the Middle East George Mitchell arrived in Israel Sunday and met with Defense Minister Ehud Barak as part of an ongoing effort to reach an agreement on construction in the settlements. The two are reportedly close to a deal in which Washington would allow a limited number of projects in advanced stages of construction to be completed, but Israel would freeze all other building for an as-yet undetermined period of time.

At a brief press conference after their meeting, Mitchell insisted that the dispute over settlement construction was a "discussion among friends," not a quarrel. Barak vowed that Israel would do everything in its power to advance a regional peace agreement, but without sacrificing its "vital interests."

Sources well-versed in the talks told Haaretz that no agreement will be signed during this visit, but the gaps have narrowed significantly. They said that Israel, which initially opposed Washington's demands, has softened its stance considerably, while the Americans are also making efforts to bridge the gaps.

U.S. Secretary of Defense Robert Gates will arrive here Monday, and U.S. National Security Advisor James Jones will follow Tuesday. Both are expected to address a broader range of issues Mitchell has, including efforts to halt Iran's nuclear program and bilateral security cooperation.

On the settlement issue, Israel claims that 700 buildings containing 2,480 apartments - mostly in ultra-Orthodox settlements such as Kiryat Sefer and Betar Illit - are too far along in the construction process to be halted. The U.S. seems to be moving toward allowing these 700 buildings to be completed.

There are also some nonresidential construction projects in the West Bank whose completion Israel deems vital, such as closure of gaps in the separation fence and paving of certain roads. The Americans want to reach detailed agreements on every one of these elements.

Unlike in the past, Israel's defense establishment has given the Americans complete information on all West Bank construction projects, on orders from Barak.

A future agreement is also expected to include a renewed Israeli pledge to evacuate 23 illegal outposts built after March 2001. However, Jerusalem wants to link fulfillment of this promise to moves toward normalization by Arab states.

Mitchell came to Israel from Syria, where his aide Frederick Hof had already spent several days. The decision to make Damascus his first stop was meant to show that the U.S. is serious about reviving Israeli-Syrian talks, although some members of the American team see an Israeli-Syrian agreement as being nearly impossible.

France, a key player in the West's recent rapprochement with Syria, also has doubts on this score: Its foreign minister, Bernard Kouchner, said recently he felt the chances of an Israeli-Syrian breakthrough were low.

From Israel, Mitchell made an unscheduled trip to Egypt yesterday; today, he will go to Ramallah to brief Palestinian Authority President Mahmoud Abbas on the emerging deal with Israel over the settlements. The PA is very unhappy with this development, as it will enable the completion of thousands of apartments.

Abbas has been refusing to resume talks with Israel without a complete settlement freeze, and thus far, Washington has supported him. But if it reaches a deal with Israel, that is likely to change.