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U.S. Secretary of State Condoleezza Rice said on Monday that Israeli-Palestinian peace talks were on the right track and she believed a deal was still possible by year's end.

The comments came as the Palestinian foreign minister said Israel had removed checkpoints in the West Bank town of Jericho as part of commitments made to Rice.

"I have to say I find very impressive the work that is being done and the seriousness of the process and I think it's all moving in the right direction," Rice said at a news conference with Palestinian President Mahmoud Abbas in Jordan.

Commenting on U.S. hopes for an agreement before U.S. President George W. Bush leaves office in January, she said: "I fully believe that it is a goal that we can reach."

Abbas likewise expressed confidence despite differences with Israel over what the outcome of the negotiations should be.

"I am confident, God willing, we will reach a comprehensive peace in 2008. We, the Israelis and the Americans and all the concerned parties in the region, are working to achieve this," Abbas said.

Palestinian Foreign Minister Riad Malki said that Israel had notified the Palestinian Authority that two checkpoints in Jericho had been removed earlier in the day.

Malki told reporters that Israel will also take down smaller barriers at different points around the West Bank. Rice announced the Israeli easements on Sunday during a visit to the region meant to prod along peace talks.

On Sunday, Rice vowed that the U.S. would step up its efforts to ensure that Israel carries through the implementation of promised measures that aim to improve living conditions for the Palestinian population in the West Bank.

During a trilateral meeting Rice held with Defense Minister Ehud Barak and Palestinian Prime Minister Salam Fayyad, Israel presented a list of measures that it intends to take to ease West Bank restrictions, including the removal of a permanent checkpoint east of Ramallah and some 50 dirt roadblocks that have prevented passage in the areas of Jenin, Tul Karm, Qalqilya, and Ramallah.

Rice on Monday also called for a halt to Israeli settlement building.

"We continue to state America's position that settlement activity should stop, that its expansion should stop - that is indeed not consistent with 'road map' obligations," Rice said at a press conference in Amman, Jordan with Palestinian President Mahmoud Abbas.

Israeli officials say the goal of the talks was to reach understandings setting out the shape and structure of a future Palestinian state rather than a comprehensive peace agreement this year that would be implemented.

Rice met earlier Monday in Jerusalem with Foreign Minister Tzipi Livni and former Palestinian prime minister Ahmed Qureia, both of whom are heading the recently revived final status peace talks.

Rice also met Monday with Olmert and was travel to Amman to meet for a second time with Abbas, as part of a three-day mission to the region aimed at advancing the peace process.

In the coming weeks the defense establishment will evaluate lifting more roadblocks and will present its recommendations in early May, prior to the scheduled visit of President George W. Bush.

Israel has also agreed to allow greater freedom of action to the PA's security forces in West Bank areas that are under Israeli security control, also known as Area B. The mechanism by which Israel grants permission to PA security forces to operate will be improved and the time lag between the requests and the permits will be cut to an hour.

Israel has also agreed to allow the PA to build new police stations in Area B.

A decision was also made to revive a promise made during the tenure of Amir Peretz at the Defense Ministry, allowing the Palestinians to build a new neighborhood with 5,000 to 8,000 new residential units near Ramallah.

The construction had been approved a year ago in a meeting between then deputy defense minister Ephraim Sneh and Palestinian mediator Saeb Erekat at the home of the U.S. ambassador to Israel.

Meanwhile, U.S. officials said Monday said that Lt. Gen. William Fraser III, the military man appointed by Rice to monitor implementation of the road map, is expected back in the region around April 11.

News agencies on Monday quoted a senior Israeli official as saying Rice was testing the water during her current visit to the region to see if it would be possible to present a draft declaration on a Middle East agreement before President George Bush's visit in May.

The official said Rice was interested in a draft delcaration or memorandum of understanding as an interim "achievement" when Bush returns to the region in May to mark the 60th anniversary of Israel's founding.

"She wants something before he comes in May," the official said.

A senior Western diplomat said the proposed document would present "the final status issues without the details."

Palestinian negotiator Saeb Erekat, who attended Rice's meeting with Palestinian President Mahmoud Abbas on Sunday, said the secretary of state did not propose crafting any interim documents for Bush's return.