U.S. Seeking Israeli-Palestinian Framework Deal Within Month

Photographer: Brendan Smialowski/AFP via Getty Images

U.S. Secretary of State John Kerry makes a statement to the press before a meeting with the Israeli Prime Minister on January 2, 2014 in Jerusalem. Close

U.S. Secretary of State John Kerry makes a statement to the press before a meeting with... Read More

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Photographer: Brendan Smialowski/AFP via Getty Images

U.S. Secretary of State John Kerry makes a statement to the press before a meeting with the Israeli Prime Minister on January 2, 2014 in Jerusalem.

U.S. Secretary of State John Kerry hopes to propose a blueprint within a month that would guide talks on a peace treaty between Israelis and Palestinians, the U.S. ambassador to Israel said.

Kerry’s private discussions with Israeli Prime Minister Benjamin Netanyahu and Palestinian President Mahmoud Abbas make him optimistic about resolving their differences, Ambassador Daniel Shapiro said today in an interview with Israel Radio.

In the initial deal, “we have to resolve several key questions that are at the heart of the conflict,” Shapiro said. “It has to be more than just, say, an interim agreement.”

The secretary of state set a nine-month limit when he arranged the latest round of Israeli-Palestinian negotiations at the end of July. He has traveled to the region 10 times to try to coax a deal from the two leaders and plans to return soon, Shapiro said, without specifying a date.

U.S. officials have said a framework agreement would offer a shared vision of how peace would look and would be followed by further talks to reach a final treaty. Israel’s credit-default swaps, which typically fall as investor confidence improves, have declined to their lowest in more than four years amid the peacemaking.

The secretary-general of Abbas’s office, Tayeb Abdel-Rahim, said he delivered a letter from the president to the Arab League, describing what Kerry seeks in a framework agreement.

Optimism Questioned

Palestinian officials say Kerry’s optimism has little basis. “There is still a big gap between the positions,” Hana Amara, a member of the Palestine Liberation Organization’s decision-making executive committee, told Voice of Palestine radio.

Amara is among officials who have expressed strong opposition to Netanyahu’s demand that the Palestinians recognize Israel as a Jewish state. Such a step, they say, would weaken the rights of Israel’s Arab citizens, who make up about 20 percent of the population, and damage the claims of Palestinian refugees to return to their homes in Israel. Netanyahu says recognition would avert all Palestinian claims against Israel in the future.

Israeli Defense Minister Moshe Ya’alon agreed there are “big gaps” while adding, “It’s definitely in our interest to continue the talks and to continue to act, to stabilize the situation and relations between us and the Palestinians.”

Swaps Fall

As Kerry labors to bring the talks to a successful conclusion, the cost to protect Israel’s debt from default for five years has fallen. They declined 4 basis points today to a mid-price of 90 basis points, the lowest since September 2009, according to data provider CMA, which is owned by McGraw Hill Financial Inc. and compiles prices quoted by dealers in the privately negotiated market.

The efforts to bridge gaps between Israel and the Palestinians have highlighted divisions in Israel’s governing coalition. In a sign of the opposition Netanyahu faces, Economy Minister Naftali Bennett threatened that his Jewish Home Party would pull out of a government “that takes easy but dangerous decisions” under international pressure.

“We will never agree to cede a Jerusalem that is united under Israeli sovereignty and Israeli sovereignty alone,” Bennett said today at a conference in Tel Aviv. “We won’t accept a Palestinian terror state and an agreement based on ’67 lines,” he said, referring to the frontiers Israel held before capturing the West Bank, east Jerusalem and Gaza Strip that year. Israel withdrew settlers and soldiers from Gaza in 2005.

Bennett renewed his call to annex parts of the West Bank where about 350,000 Israelis settlers live, and said Palestinian refugees and their descendants, after moving to a state of their own, would stake claims to Israel.

“A Palestinian state is a demographic catastrophe for Israel,” he said.

To contact the reporter on this story: Jonathan Ferziger in Tel Aviv at jferziger@bloomberg.net

To contact the editor responsible for this story: Andrew J. Barden at barden@bloomberg.net

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