Israeli Source: Cabinet Likely to Accept U.S. Trade for Settlement Freeze

The deal includes a U.S. undertaking not to request a further extension of the freeze past the suggested 90-day moratorium, and to veto any attempt by the Palestinians to win UN recognition of their state unilaterally.

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Prime Minister Benjamin Netanyahu will probably win narrow approval from his coalition government for a U.S. proposal to extend a freeze on West Bank settlement building, Israeli political sources said on Sunday.

The Palestinians halted peace talks after the 10-month Israeli moratorium on settlement construction expired in September. The Obama administration has offered Israel diplomatic and defense perks to renew the freeze for 90 days.

Netanyahu, who visited the United States last week, convened his cabinet to outline the proposal, which he said was still being drafted with the Americans. Once ready, it would be put to a vote in Israel's 15-minister security cabinet, he said.

"In any event, I insist that any proposal meet the State of Israel's security needs, both in the immediate term and vis-a-vis the threats that we will face in the coming decade," Netanyahu said in remarks broadcast by Israeli media.

The deal includes a U.S. undertaking not to request a further extension of the freeze, and to veto any attempt by the Palestinians to win UN recognition of their state unilaterally.

The Obama administration would also ask Congress to approve a $3 billion sale of warplanes to Israel and, should there be peace with the Palestinians, guarantee its wider security needs. These would supplement the 20 F-35s Israel already plans to buy for $2.75 billion drawn from annual grants it gets from Washington.

An Israeli political source said the security cabinet vote was expected later this week and that seven ministers - Netanyahu among them - were likely to back the U.S. proposal, against six who would vote against and two who would abstain.

The forum includes representatives of major coalition partners, from the center-left Labor party of Defense Minister Ehud Barak to Netanyahu's rightist Likud to the far-right Yisrael Beiteinu party of Foreign Minister Avigdor Lieberman.

In private, Palestinian officials have expressed anger over U.S. incentives to get Israel to prolong the partial moratorium on settlement building, saying it effectively constituted bribing Israel to fulfill basic international obligations.

A spokesman for Palestinian President Mahmoud Abbas said there had been no formal word regarding a renewed freeze on housing starts in the West Bank, which, along with adjacent East Jerusalem and the Gaza Strip, Israel occupied in the 1967 Six-Day War.

"An official Palestinian commitment will come only after President Abbas hears officially from the American administration what is going on between them and the Israelis," Nabil Abu Rdainah told Reuters.

Netanyahu has previously said any settlement moratorium will not apply to areas around East Jerusalem, which Israel calls part of its capital - a status not recognized abroad - and where Palestinians want to base their own capital.

The Palestinians said the original moratorium was too limited in scope, as it did not include public buildings or settler projects already under way. They have also demanded that any new freeze include Jewish districts in East Jerusalem.

Secretary of State Hillary Clinton shared the U.S. proposal at a meeting in New York last week, Netanyahu said.

Israeli officials said Netanyahu, who faces a tough political sell within his own coalition on the settlement issue, had pushed Clinton for the broad understandings.

Settler leaders, who said acceptance of the proposal would represent "a fundamental collapse" of the government's integrity, called an emergency meeting to discuss the issue.

Should Yisrael Beiteinu or a smaller pro-settler party in the coalition quit the government in protest of a renewed freeze, it could prompt Netanyahu to seek a new alliance with the centrist Kadima party of opposition leader Tzipi Livni.

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