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The Palestinian Authority and several Arab states are developing a plan to be submitted to U.S. President Barack Obama that would provide for gestures to Israel in return for Israeli concessions to the Palestinians. The plan is designed to show Arab flexibility in the face of anticipated intransigence, in their view, from Prime Minister Benjamin Netanyahu.

Palestinian sources in Ramallah said yesterday that they expect the United States administration to impose a new U.S. peace plan on Israel and the Palestinians next month. The American plan would be developed in consultation with the parties to the conflict but not necessarily with their agreement and would have the support of the European Union, the United Nations and Russia. The proposal would deal with a final settlement of the Arab-Israeli conflict, including relations with Syria and Lebanon. It would also mention the establishment of full diplomatic relations between Israel and Arab states.

The London-based Arab newspaper Al Quds al-Arabi reported yesterday that the Arabs were considering making concessions to Israel regarding the right of return of Palestinian refugees and on the transfer of the Old City of Jerusalem to UN control.

The plan will only be finalized after Obama's upcoming meetings with Netanyahu, Palestinian President Mahmoud Abbas and Egyptian President Hosni Mubarak. It is not expected to address the Iranian issue, which will be handled separately by the Americans.

The secretary general of the Palestine Liberation Organization executive committee, Yasser Abed Rabbo, told Haaretz by phone from Jordan yesterday that the Palestinians believe the Americans are determined to pursue peace in the Middle East.

Abbas and Mubarak met yesterday in Cairo as part of an effort to coordinate the Arab position toward the United States. The nature of the Arab goodwill gestures toward Israel and Arab demands from Israel in return were high on the agenda. After the meeting, Abbas said that the plan that he and Mubarak will present to Obama constitutes a comprehensive plan to resolve the Middle East conflict.

A source close to the talks said the Palestinians seek to bring the Arab states into the negotiations as a third party, in anticipation that it would strengthen the Palestinian position vis-a-vis the U.S. The Palestinians are interested in demonstrating initiative on the part of the Arab states, including renewed involvement by an Arab League delegation in direct talks with Israel as well as other gestures toward normalization.

Arab sources told Haaretz yesterday, however, that the position of the Arab states would be based on the Arab peace initiative, without changes.