Israel-Palestine Analysis: What Can Netanyahu Offer the Palestinians?

On Monday the Jerusalem municipal planning committee approved construction of 32 new apartments in a Jewish neighborhood in the Pisgat Ze'ev across the Green Line.

Elisha Peleg, a member of the Jerusalem Municipal Planning and Construction Committee, said: "We will continue to plan and build in every neighborhood in this city and we will not allow external forces to intervene."

The development comes days before US special envoy George Mitchell arrives for talks with Palestinian Authority leader Mahmoud Abbas, who in turn meets Egyptian President Hosni Mubarak before the weekend.

While some argue that Ramallah will not go to direct talks when the four-month proximity discussions end in September --- since Israelis have not agreed to continue the December 2008 negotiations and to halt construction both in East Jerusalem and in the West Bank --- Yasser Abed Rabbo, a Palestine Liberation Organization official, hinted a possible deal. He said:

We don't know that the proximity talks have stopped. Mitchell is coming next week, and the context and the core of the talks are more important to us than the way they are being held.

If the Palestinians move from proximity talks to direct talks, I believe that the negotiations between Israel and the Palestinians will be similar to the type of negotiations between the two sides before it stopped in December 2008.

PA officials in Ramallah on Monday did not rule out the possibility. “We don’t rule out direct talks,” said one official. “But before we move to these talks, we want to have a clear agenda and timetable.”

Ramallah will not make a decision without the Arab League's confirmation but the advance towards direct talks can only come with Israel's clear pledges for the continuation of discussions stopped in December 2008. Even then, it is not going to be easy for the Palestinian Authority to sit on the table when construction is continuing in East Jerusalem, let alone when the freeze on building in the West Bank end in September.

The Palestinians are likely going to ask for a public declaration of intent to make East Jerusalem the capital of a future Palestinian state. Whether that is enough to swallow the Israeli refusal, in advance of talks, to curb settlements is unknown.

Even so, given the various interests of a broad Israeli coalition, can Netanyahu even go this far to fulfil his claim that he is ready for direct exchanges with his Palestinian counterparts?