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Foreign Minister and Kadima Chairwoman Tzipi Livni on Thursday said peace talks with the Palestinians must stay on course in light of elections in Israel and the United States.

She said both Israel and the Palestinian Authority must "preserve the process within the structure that we have created."

"We are realistic enough to recognize the reality we face, but we are also determined enough to change it. I believe deeply that stagnation is not in Israel's interest and cannot be our policy," Livni added.

The foreign minister's comments came during a joint press conference with held with U.S. Secretary of State Condoleezza Rice Thursday, in which Rice all but conceded that reaching an Israeli-Palestinian peace deal by the year's end is no longer possible.

Rice, when questioned about whether the U.S. was looking for a document of some kind to lay down on paper what progress the sides have made and whether they have reaffirmed their commitment to the Annapolis agreement, replied: "As I understand it, they are going to affirm that the Annapolis process and the framework it establishes is indeed the basis on which they believe they can come to a resolution of their conflict, regardless of anyone's timetables."

Rice also said upon arriving in Israel that it is important to maintain momentum and support for the negotiations so that new governments in both Israel and the U.S. have a firm foundation to continue to the talks next year.

Rice was making her eighth trip to Israel and the West Bank since the sides set the target for reaching an agreement at last November's summit at Annapolis, Md. She said political uncertainty in Israel is the main complication to the goal.

Outgoing Prime Minister Ehud Olmert is being forced from office by a corruption scandal, and the country is set to hold new elections in February. Rice noted that the situation is a constraint on the ability of any government to conclude a deal.

"I've learned never to predict in this business," she said, "but it is clear we're in a different situation now because Israel is going to elections."

"It is our expectation that the Annapolis process has laid groundwork which should make possible the establishment of a Palestinian state when the political circumstances permit," Rice added. "I think that whatever happens by the end of the year, you've got a firm foundation for quickly moving this forward to conclusion."

The two sides for months have been backing away from the timeline pushed in Annapolis.

Although Rice refused to absolutely rule out the chance of an agreement by year's end, her remarks reflect the first time that a Bush administration official has publicly not held out hope that the deadline could be met.

Israeli and Palestinian officials have long said they believe the year-end deadline is unrealistic.

"We are also worried of the vacuum left as Israelis and Americans are preoccupied with elections and their results," senior Palestinian negotiator Saeb Erekat told Reuters after he met U.S. Assistant Secretary of State David Welch in Jericho.

"We are worried that this vacuum would be filled with more settlements and Israeli military campaigns like the one we're seeing in Gaza," he added.

Rice, however, vowed to work with the parties until the day she left office. "We'll see where they are at the end of the year," she said.

With her time in office rapidly waning, Rice is hoping to shore up the fragile Israeli-Palestinian negotiations and leave a viable process for the incoming administration of President-elect Barack Obama.

She will also visit Egypt and Jordan to shore up Arab support for the talks. At some point before Obama moves into the White House on Jan. 20, Rice said she would like to see the sides memorialize the progress they have made but not stretch to conclude a partial deal.

"It will be important to wrap up all of that work one way or another," she said.

Rice has been making the same twin challenges to Israel and the Palestinians on more than 20 largely fruitless journeys to the region during her tenure as secretary of state: Israel should loosen its grip on the West Bank and the Palestinians should tighten theirs on militants.

The talks that began in Annapolis, Md., have produced few tangible results and are expected to be placed on hold for at least several months during the U.S. transition from Bush to Obama. In addition, Israel will hold elections on Feb. 10 and there are questions about the tenure of Palestinian President Mahmoud Abbas, whose opponents claim his term expires in January.

Rice will see Abbas and Olmert, along with the chief negotiators from both sides, on Thursday and Friday before visiting Jenin, the West Bank town where Palestinians retook security control early this year on Saturday.

She then heads to the Red Sea resort of Sharm el-Sheik in Egypt where top officials from the international diplomatic quartet on the Middle East will be briefed on the status of the talks on Sunday.

Any results officially reported to the quartet - the European Union, Russia, the United States and the United Nations - from Palestinian-Israeli talks so far could become a basis for future negotiations, even after the Israeli election.

The quartet envoys will get from Israeli and Palestinian negotiators a progress report that could prevent backpedaling during the Israeli and U.S. leadership changes.

The idea is to listen and to record and to know where we are heading, EU envoy Marc Otte said after meeting with the chief Palestinian negotiator in Jerusalem on Thursday.

Israel and the Palestinians have agreed on key principles, such as a land swap, but gaps remain wide on core issues, including the partition of Jerusalem and the fate of Palestinian refugees.