U.S. envoy George Mitchell and Prime Minister Benjamin Netanyahu
U.S. envoy George Mitchell and Prime Minister Benjamin Netanyahu in Jerusalem on December 13, 2010 Photo by Reuters
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Prime Minister Benjamin Netanyahu told visiting U.S. envoy George Mitchell on Monday that he was prepared to discuss all of the essential issues necessary for resuming negotiations with the Palestinians and reaching a peace agreement,

Ahead of their three-hour meeting, Mitchell emphasized that the Obama administration was intent on pursuing the goal of reaching a final Israeli-Palestinian peace treaty in accordance with the path the two sides laid our during their brief direct negotiations in September.

"In their direct talks, both sides decided together to pursue a framework agreement that would establish the fundamental compromises on all permanent status issues and pave the way for a final peace treaty," Mitchell said. "That remains our goal."

With face-to-face Israeli-Palestinian negotiations at an end for now over the settlement impasse, Secretary of State Hillary Clinton announced on Friday that Washington would refocus efforts on a return to indirect talks.

Quoting Clinton's remarks to that effect, Mitchell said Monday: "Reaching this goal will not be easy by any means. The differences between the two sides are real and they are persistent. But the way to get there is by engaging, in good faith, with the full complexities of the core issues and by working to narrow the gaps between the two."

Mitchell was expected during his visit put forth U.S. ideas for moving the peace process forward and an Israeli official close to Netanyahu said he was looking forward to hearing the initiative.

The envoy was expected to make clear to Netanyahu that the Obama administration wants him to take a position in the coming weeks on the core issues, with an emphasis on borders.

Mitchell is also scheduled to hold talks with Palestinian President Mahmoud Abbas in Ramallah. But the brunt of the work will be in Israel because the Palestinians have already submitted their opening positions on all the core issues - borders, security, Jerusalem, refugees, water and the settlements.

The Americans have heard little new from Netanyahu, with the exception of ideas on security and aspects considered secondary such as the environment and the economy.

Hours before his meeting with Mitchell, Netanyahu told a business conference in Tel Aviv that he was pleased that the U.S. had decided to drop efforts to achieve a construction freeze on Israeli settlements and focus on resolving core issues of the Middle East conflict.

"I welcome this American decision. It is good for Israel. It is good for peace," said Netanyahu, who resisted U.S., Palestinian and international calls for a construction moratorium.

The core issues under consideration include borders, security, the future of Jerusalem and settlements in territory Israel captured in the 1967 Six-Day War and the fate of Palestinian refugees.

"To reach peace, we have to discuss the issues that are truly delaying peace ... I welcome the fact that we will now begin discussing these issues and try to narrow gaps," Netanyahu said in his speech to the business forum.

Palestinian officials, who have been highly critical of the U.S. policy shift, said the seriousness of any coming political process would depend on foundations including a halt to settlement building and clear terms of reference.

The Palestine Liberation Organization's executive committee, which convened on Monday, said Israel's policy "threatened the stability of the region" and showed that its priorities were "settlement, expansion and perpetuating the occupation".

The Palestinians had demanded a full halt to settlement building before any more peace talks. They fear settlement expansion on land where they aim to found their state will render that goal impossible.

Palestinian officials have voiced concern that Israel would try to undermine any indirect negotiations by avoiding discussion of future borders of a state they intend to establish in the West Bank and Gaza Strip, captured by Israel in 1967.

Israel and the Palestinians began direct peace talks in Washington in September but they broke down several weeks later when Netanyahu refused to extend a 10-month freeze of housing starts in settlements in the West Bank.

Meanwhile, Defense Minister Ehud Barak said Monday that the Israeli government would have to discuss every core issue related to the Middle East conflict as it pushed its way back into the peace process - including Jerusalem.

Speaking in Washington after days of talks with U.S. officials, Barak said that the resumption of negotiations with the Palestinians had been one of the central topics of conversation.

"The essence was clear: We are heading toward actual negotiations and all of the core issues – borders, refugees, the end of the conflict – will be brought up for debate," said Barak."The mechanics will become clearer over the coming weeks, but as long as it is up to us… we will advance them," he said.

"There is no need to reveal every detail of our stance prior to the negotiations," Barak said, adding: "I respect the prime minister, and I have no doubt that we as a government are faced with the need to discuss all core issues, including Jerusalem."

Netanyahu earlier this week distanced himself from Barak's declaration that Israel should accept former U.S. President Bill Clinton's 2000 initiative to divide Jerusalem according to Jewish and Arab lines.