US IN DIPLOMATIC PUSH

US in diplomatic push for Mideast peace Sun Jul 26, 3:49 am ET

WASHINGTON (AFP) – US Defense Secretary Robert Gates heads to the Middle East on Sunday as part of a broader diplomatic push by President Barack Obama to breathe life into faltering peace talks between Israel and the Palestinians, US officials said.

Gates' talks in Israel and Jordan coincide with high-level diplomatic visits the same week by the US envoy to the Middle East, George Mitchell, and a delegation led by Obama's national security advisor, James Jones, US officials said.Mitchell held talks with Syrian President Bashar al-Assad on Sunday after arriving overnight for his second visit to Damascus since mid-June on a trip that was to take him on to Israel and the Palestinian territories later on Sunday.His talks with Assad are aimed at trying to see what Syria's prepared to do... to move towards a comprehensive process, State Department spokesman Philip Crowley said on Thursday.We're also trying to develop... bilateral issues that we have with the Syrians as well. I would imagine both of those will come up.US President Barack Obama has moved to re-engage Damascus -- a key regional player -- as part of a bid to breathe new life into faltering peace talks between Israel and the Palestinians.Relations between the United States and Syria -- which were strained under the administration of US president George W. Bush -- have begun to improve since Barack Obama became president.Washington announced on June 24 its decision to send an ambassador back to Damascus to replace the envoy who was recalled in 2005 after the assassination in Beirut of former Lebanese prime minister Rafiq Hariri.The killing was widely blamed on Syria although Damascus has steadfastly denied any involvement.Washington has also accused Damascus of supporting terrorist groups, seeking to destabilise Lebanon and allowing transit through Syria of weapons and fighters headed to Iraq.The flurry of diplomacy also is expected to focus on Iran's disputed nuclear program, as the Obama administration had suggested any outreach with Tehran would have to wait until after the June 12 presidential elections.Jones will lead a delegation to Israel and the West Bank from July 28-30 to discuss the broad range of issues in our relationships with Israel and the Palestinian Authority,a White House official said.This trip builds on discussions special envoy Mitchell and Secretary Gates will have a few days earlier, the official said.Gates was due on Monday to meet his Israeli counterpart, Defense Minister Ehud Barak, before holding talks with Prime Minister Benjamin Netanyahu, defense officials said.

Gates was scheduled to travel later on Monday to Jordan, where he was expected to discuss regional peace efforts, Iran and the US drawdown in Iraq among other issues with his Jordanian counterpart and King Abdullah II.The round of US diplomacy with Israel comes amid tensions between the two allies and criticism from an Israeli minister over Washington's stance on Iran's nuclear drive.Intelligence Services Minister Dan Meridor last week said comments from US Secretary of State Hillary Clinton suggested Washington was already resigned to Iran gaining a nuclear weapon.

But a senior defense official told reporters Washington shared Israel's concerns over Iran's nuclear program.I don't think there's distance on how serious we're taking that challenge,the official said. The Israelis were not opposed to Obama's bid to open a dialogue with Iran but were pessimistic about prospects for success, the official said.But Gates would not be discussing any contingency plans for a military strike against Iran and the administration remained focused on a diplomatic approach, the official said.The defense secretary and top US military officer Admiral Mike Mullen have been very clear that we think that a unilateral Israeli strike on Iran's nuclear facilities could be profoundly destabilizing to the region,the official said.

The secretary is not going there to roll out a map and do contingency planning for some strike on Iran,he said. As part of Middle East peace efforts, Gates was expected to discuss bolstering Israel's security with better missile and rocket defenses, the defense official said.As Israel had faced mortar and rocket attacks when it pulled out of southern Lebanon and from Gaza, the official said it's a genuine security concern that they have.If they're going to be comfortable in taking the risk that pulling out of the West Bank eventually will require them to take, I think they're going to need some confidence that they have defense mechanisms against the possibility that history will repeat itself,he added. The official said Gates was not expected to raise Washington's demand that Israel freeze all settlement activity in occupied Palestinian territory, as that was an issue for US diplomats and not the Defense Department.The US demand for a settlement freeze has triggered an unusual public row between the two allies.

Lawmakers urge UK government to talk to Hamas By Adrian Croft – Sat Jul 25, 7:17 pm ET

LONDON (Reuters) – Lawmakers urged the British government on Sunday to talk to moderates within Hamas, saying the West's policy of shunning the Palestinian Islamist group was showing little sign of success.The British parliament's Foreign Affairs Committee said in a report it stood by a recommendation it first made two years ago that the government should engage politically with moderate elements within Hamas, which rules the Gaza Strip.Britain and other Western nations reject contact with Hamas because of its refusal to recognize Israel, renounce violence and accept existing interim peace deals.Russia is the only member of the Quartet of Middle East peace brokers -- which also comprises the United States, the United Nations and the European Union -- talking to Hamas.We conclude that there continue to be few signs that the current policy of non-engagement is achieving the Quartet's stated objectives,the committee said.We further conclude that the credible peace process for which the Quartet hopes, as part of its strategy for undercutting Hamas, is likely to be difficult to achieve without greater cooperation from Hamas itself.The committee said it was concerned the Quartet was failing to provide Hamas with greater incentives to change its position. It said Britain should talk to Hamas moderates as a way of encouraging the group to meet the Quartet principles.Prime Minister Gordon Brown's government changed policy in March by saying it was open to talks with the political wing of Lebanon's Iranian-backed Hezbollah, but it remains opposed to talking to Hamas.The committee, made up of Members of Parliament from all the main political parties, said it was dismayed that, six months after the end of fighting in Gaza, there was still no ceasefire agreement between Israel and Hamas. There had been little change to several issues that contributed to the conflict, it said.We conclude that this situation makes for an ongoing risk of insecurity and a renewed escalation of violence,it said.Israel invaded Gaza on December 27, 2008 and fighting continued until January 18, 2009, killing more than 1,000 people.The committee said it was deeply concerned about the high number of casualties, the extent of the damage and allegations of violations of international law during the Gaza conflict.We conclude that Hamas targets civilians in its armed actions, and that Israel's military action in Gaza was disproportionate,it said.(Editing by Alison Williams)

US transfers $200 million in aid to Palestinians By KARIN LAUB, Associated Press Writer – Fri Jul 24, 4:29 pm ET

RAMALLAH, West Bank – The United States has transferred $200 million to the Palestinian government to help ease a growing budget deficit, U.S. Secretary of State Hillary Rodham Clinton said Friday.Palestinian Prime Minister Salam Fayyad has been struggling in recent months to keep his government afloat, borrowing hundreds of millions of dollars from commercial banks just to cover the public payroll.The reasons for the shortfall include Israel's restrictions on the Palestinian economy, the border blockade of the Hamas-ruled Gaza Strip and the failure of some donor countries to make good on their aid pledges, Fayyad said Friday, in a video conference with Clinton.With Friday's aid transfer, donor countries have given the Palestinian government $606 million in budget support this year, covering only about one-third of the estimated deficit of $1.45 billion for 2009, Fayyad said.We have received aid, but not enough to deal with our needs, and we faced sharp economic difficulties throughout the last months, Fayyad told reporters.Since 2007, donor countries have pledged more than $10 billion to the Palestinians, to help shore up the Western-backed government of Palestinian President Mahmoud Abbas, who lost Gaza in a violent Hamas takeover two years ago. However, the aid has had little impact, largely because Israeli restrictions on Palestinian trade and movement have prevented a recovery of the Palestinian economy.Earlier this year, the Obama administration pledged $900 million in aid to the Palestinians, and the $200 million in budget support announced Friday are part of that sum. Clinton told Fayyad that the transfer of U.S. aid directly to his budget was an expression of confidence in his fiscal reforms.The ability of the United States to provide support directly to the Palestinian Authority is an indication of the bipartisan support for the effort to secure the peace in the Middle East, as well as for the fundamental reforms that the Palestinian Authority has undertaken,she said.Members of Congress from both sides of the aisle worked closely with us to make this assistance possible.Clinton was vague about prospects for a resumption of Israeli-Palestinian peace talks, saying only that she believes the Obama administration is making progress in creating the right environment for such negotiations in the near future.Israeli Prime Minister Benjamin Netanyahu has said he is willing to resume negotiations, but not on the terms to which his predecessor had agreed. Palestinian President Mahmoud Abbas, in turn, says he will not get back to negotiations unless Israel first halts settlement construction. The U.S. has also been pushing Israel for a settlement freeze, in line with its obligations under a U.S.-backed peace plan.

However, Israel has balked at halting construction. Earlier this week, Netanyahu publicly dismissed a U.S. request that Israel halt a housing project for Jews in east Jerusalem, the part of the city claimed by the Palestinians as a capital.Clinton on Friday described the discussions with Israeli officials as very forthright,but also as conversations between friends.Senior administration officials are heading to the region in coming days, including Mideast envoy George Mitchell, National Security Adviser Jim Jones and Defense Secretary Robert Gates. Mitchell has met repeatedly with Israeli Defense Minister Ehud Barak to discuss settlement construction.

Illegal Lebanon arms may have been Hezbollah's: U.N. By Louis Charbonneau Louis Charbonneau – Fri Jul 24, 3:01 pm ET

UNITED NATIONS (Reuters) – The U.N. peacekeeping chief has said there are signs an illegal weapons stockpile that exploded last week in southern Lebanon belonged to the Lebanese guerrilla movement Hezbollah.In a speech delivered behind closed doors to the Security Council Thursday, U.N. peacekeeping chief Alain Le Roy also said that some of the people who tried to prevent U.N. peacekeepers in Lebanon (UNIFIL) from investigating the site were Hezbollah members dressed in civilian clothes.A number of indications suggest that the depot belonged to Hezbollah, and, in contrast to previous discoveries by UNIFIL and the Lebanese Armed Forces of weapons and ammunition, that it was not abandoned but, rather, actively maintained, he told the 15-nation council in the speech, obtained by Reuters.Le Roy said the mere presence of such arms south of the Litani River represented a serious violation of resolution 1701.U.N. diplomats told Reuters it was the first time the world body has criticized Hezbollah so directly and sharply.Security Council resolution 1701, which ended the 34-day war in 2006 between Israel and Hezbollah, banned all unauthorized weapons between the Litani River and the Blue Line, the U.N.-monitored border between Israel and Lebanon.Hezbollah is backed by Iran and Syria.The weapons at the site of the explosion were from various countries and included mortars, AK-47s, artillery shells and 122mm rockets, Le Roy said.

ARMS IN GOOD ORDER

The weapons and ammunition dated from the 1970s to the 1990s and generally appeared to be in good order,he added.After Le Roy's speech, U.S. Deputy Ambassador Alejandro Wolff joined Israel in accusing Hezbollah of violating the U.N. weapons embargo in southern Lebanon and undermining the efforts of U.N. peacekeepers there.UNIFIL said last week that peacekeepers had been pelted with stones by a crowd of about 100 Lebanese in the village of Khirbet Selim while trying to investigate the July 14 explosion at the suspected arms dump. Le Roy said the blast site was still being investigated.A Hezbollah parliamentarian denied Friday the movement had any role in the disturbances and said it was keen to restore relations between UNIFIL and local people to normal.The baseless American accusations are a repetition of the Israeli position and an expression of the U.S. administration's support for continuous Israeli aggression against Lebanon via its violations and spy networks,Hassan Fadlallah told Reuters.He denied the blast was a violation of resolution 1701, saying it was a one-off accident that involved the explosion of an arms cache that had been in place before the 2006 war.Fadlallah said the U.N. Security Council had done nothing to stop Israeli violations of Lebanese sovereignty, including almost daily military flights in breach of 1701. U.N. officials have repeatedly urged Israel to halt such illegal overflights.Israel's U.N. ambassador, Gabriela Shalev, said in a letter to the Security Council that the arms cache that exploded clearly belonged to Hezbollah.She said the actions of Hezbollah represented a clear violation of 1701 which gravely endanger the stability in the region ... (and) the local Lebanese population.(Additional reporting by Laila Bassam in Beirut; editing by Mark Trevelyan)

British anti-Semitic attacks surged post Gaza: report Thu Jul 23, 7:30 pm ET

LONDON (AFP) – The government said it was deeply concerned by a report Friday revealing an upsurge of anti-Semitic attacks this year in the wake of Israel's devastating three-week offensive in Gaza.The Community Security Trust (CST) said there were 609 anti-Semitic incidents in the first half of this year including attacks on people and synagogues.That compares to 276 for the first six months of 2008 -- and even surpasses the 544 incidents reported in the whole of that year.Israel launched a 22-day offensive against Gaza in December last year. More than 1,400 Palestinians and 13 Israelis were killed.Explaining its findings in a report, the CST said: The main reason for this record number of incidents was the unprecedented number of anti-Semitic incidents recorded during January and February, during and after the war between Israel and Hamas in Gaza.The number of incidents recorded did not return to normal pre-Gaza levels until April, some three months after the fighting in Gaza ended.The charity, which works to protect the safety of the Jewish community here, said there were 286 anti-Semitic incidents in January -- up from 43 for the same month in 2008 -- and 111 in February, an increase from 52 twelve months before.A total of 77 of the incidents reported in the first half of 2009 were violent assaults, the CST said, while there were 63 instances of damage to and desecration of Jewish property.

The report also noted hate mail, graffiti and verbal racist abuse.

The CST said that while the number of anti-Semitic attacks often goes up because of events in the Middle East, the levels recorded over the Gaza conflict outstripped by far any such surge since it started work in 1984.Foreign Office Minister Ivan Lewis said he was deeply concerned by the figures.We simply cannot tolerate those who seek to use foreign conflicts to justify racism and criminal acts against any UK citizen, he said.The UK's Jewish community... must be able to live free from fear of verbal or physical attack.This is not the first time the issue has been highlighted -- lawmakers from Britain's All-Party Parliamentary Group on Anti-Semitism said in January that a wave of anti-Semitic incidents had hit Jews as the conflict raged.

Netanyahu calls for warm peace with Arabs Thu Jul 23, 3:45 pm ET

JERUSALEM (AFP) – Prime Minister Benjamin Netanyahu called for a warm peace between Israel and its Arab neighbours on Thursday in a rare speech at the Egyptian ambassador's residence near Tel Aviv.I think we can have a very warm peace, Netanyahu said, according to statements carried by the private Channel Ten television.We hope in the months and years ahead to forge peace with the Palestinians and to expand that into a vision of a broader regional peace,Netanyahu said.I think a comprehensive peace is possible,he added.Netanyahu made the remarks at the residence of Egyptian Ambassador Yasser Rida near Tel Aviv, where a reception was held to celebrate Egyptian national day.Israeli President Shimon Peres also attended the ceremony in Herzliya north of Tel Aviv and joined Rida and Netanyahu in symbolically cutting the cake.Egypt was the first Arab state to sign a peace treaty with Israel in 1979. Jordan followed suit in 1994.Relations between Israel and its peace partners have been lukewarm if not tense at times but in recent weeks several Israeli officials have travelled to Egypt for talks with President Hosni Mubarak.

Netanyahu was in Egypt in May, followed by Defence Minister Ehud Barak in June and Peres, whose role as president is largely ceremonial, was in the neighbouring country earlier this month.Several Israeli warships have recently passed through Egypt's Suez Canal for the first time, to take part in manoeuvres in the Red Sea.Netanyahu's remarks come as US special envoy to the Middle East George Mitchell prepares to return to the region this weekend to help push the peace process.US State Department spokesman Philip Crowley said that Mitchell will hold talks with Israeli and Palestinian officials and will also travel to Bahrain.Bahrain's Crown Prince Sheikh Salman Bin Hamad Al-Khalifa authored a column in The Washington Post on July 17 calling on Arab leaders to reach out to the Israeli people by engaging with Israeli media outlets.

Israel rejects French calls to freeze settlements Thu Jul 23, 12:45 pm ET

JERUSALEM (AFP) – Israel on Thursday rejected calls by France to freeze Jewish settlement building and to reopen border crossings into the Hamas-ruled Gaza Strip.A solution to the settlements can only be reached through a comprehensive and final peace agreement,foreign ministry spokesman Yigal Palmor told AFP.In order to promote peace, France would do well to persuade the Palestinian Authority to resume negotiations with Israel which have been frozen since the end of last year, he added.

Palmor said Israel's blockade of Gaza was the result of the state of war imposed by Hamas as well as the detention for more than three years of (Israeli-French) soldier Gilad Shalit.Shalit was captured by militants from Hamas and two smaller groups who had tunnelled out of Gaza on June 25, 2006 and attacked an army post, killing two other soldiers.Israel's ambassador to France Daniel Shek was summoned to the French foreign ministry on Thursday, where the head of political affairs Gerard Araud served him with the demands.Araud told the envoy that Paris wants an immediate freeze on settlement activities, including in east Jerusalem,ministry spokesman Eric Chevallier said.Israel must also re-open border crossings into Gaza blocked since the Islamist Hamas took power in 2007, on a regular basis to allow Gaza to rebuild itself and life to return to normal,Chevallier said.Israel has defied international criticism of plans to build 20 new apartments on the site of a former hotel in the Arab sector of Jerusalem and has rejected calls from the United States, the European Union and Russia to freeze settlements in east Jerusalem.

Israel says technical hitch halts US missile test Thu Jul 23, 8:57 am ET

JERUSALEM (AFP) – Israel said on Thursday it has called off tests of its Arrow anti-missile system in the United States after the launch attempt was hit by last-minute technical problems.A target missile was already in the air when the Israeli operators of the Arrow, which is designed to shoot down ballistic missiles, decided to scrap the test on Wednesday, the defence ministry said in a statement.After the target was launched the Arrow system went into action, it said. Not all launch conditions were met and the interceptor missile was not fired.The official said faulty communications between Israeli and US military systems were behind the decision to abort.Israel's Arrow (Hetz in Hebrew) interceptor project was launched two decades ago and is aimed at countering strikes mainly from arch-foe Iran.In April, Israel reported successfully testing the system at home, intercepting and destroying a ballistic missile similar to Iran's Shahab-3, which can reach its soil.Begun in 1988, the Arrow programme is today half-funded by Israel's main ally, the United States. Israel considers Iran to be its arch-foe following repeated calls by Ahmadinejad for the Jewish state to be wiped off the map.

Israel concerned over US umbrella on Iran By MARK LAVIE, Associated Press Writer – Thu Jul 23, 3:14 pm ET

JERUSALEM – A series of failed tests of a joint U.S.-Israel anti-missile system raised new questions Thursday about the U.S. goal of providing an umbrella to defend its allies against an Iranian nuclear attack.The technological setbacks also drew renewed attention to Israel's concerns about a nuclear-armed Iran and the possibility that it might lean further in the direction of a go-it alone strike against the country's atomic facilities.Secretary of State Hillary Clinton's offer this week of a defense umbrella over its Gulf Arab allies to prevent Tehran from dominating the region once they have a nuclear weapon was widely seen in Israel as an acceptance of a nuclear-armed Iran. She later tried to dispel that view, but her comments sparked criticism by Israeli officials.Israel considers Iran its most dangerous enemy because of its nuclear program, long-range missile development and repeated references by its president, Mahmoud Ahmadinejad, to Israel's destruction. Iran has insisted that its nuclear program is for peaceful purposes, but Israel and the U.S. reject that.Adding to the urgency was word Wednesday from the head of the Russian nuclear agency that Iran's new atomic power plant will be switched on later this year.For a decade, Israel has been presenting its Arrow anti-missile system, developed and jointly funded with the U.S., as an answer to medium-range Iranian missiles that might carry nuclear warheads. Tested repeatedly, the Arrow system has often succeeded in intercepting dummy incoming missiles, to great fanfare.But just as Clinton worried Israelis by speaking of an umbrella over U.S. allies threatened by Iran, word came of three test failures in the Arrow system over the past week. The latest was in California, where a test was aborted before the Arrow missile could be launched because of a communications failure, according to Israeli defense officials speaking on condition of anonymity because they were not authorized to disclose details of the tests.

Experts played down the importance of the failures.Arrow has had a pretty successful test program,said John Pike, director of GlobalSecurity.org.I wouldn't be overly concerned about a problem like this.Uzi Rubin, former director of the Arrow project, agreed. It's really not a very serious glitch in the system that would require going back to the drawing board,he said.But the failures underlined the complexity of the whole anti-missile concept, which has been compared to throwing a rock in the air and trying to hit it with another rock. Israeli media personalities wondered if any system could protect Israel if multiple rockets were fired together.If Clinton's umbrella offer, made in a television interview in Thailand, was meant to reassure nervous Israelis, it had the opposite effect.Dan Meridor, Israel's minister of intelligence and atomic energy, was critical of Clinton's implications.He said it appeared as if they have already come to terms with a nuclear Iran. I think that's a mistake.He told Army Radio,I think that at this time it is correct not to deal with the assumption that Iran will obtain nuclear capability, but to prevent that from happening.Ever since President Barack Obama took office with a pledge to explore diplomatic contacts with Iran, Israeli officials have voiced concerns that talks would give Iran more time to develop nuclear weapons. Israelis have also suspected that the Obama administration was planning for a future Mideast that included a nuclear-armed Iran — something Israel would consider a threat to its existence.

Hours after Meridor spoke, Clinton clarified her remarks, saying she was not suggesting any new policy on Iran and continued to believe that Iran's pursuit of nuclear weapons is unacceptable.U.S. officials have not defined what Clinton meant by her original umbrella comment.Analysts offered two contrasting explanations: a threat of retaliation for any Iranian nuclear strike, or supplying U.S. allies with defense systems aimed at preventing such an attack.The umbrella formulation did not appear to include Israel, though about 150 American soldiers have been training with Israeli soldiers in the southern Negev desert for several months on advanced radar installations that could be used in missile defense, according to Israeli officials, speaking on condition of anonymity because of the sensitivity of the project. Israel has pointedly not taken the option of a military strike off the table, recalling Israel's lightning 1981 airstrike that destroyed Iraq's nuclear reactor. Experts doubt Israel has the capability of wiping out all of Iran's nuclear facilities, which are said to be scattered around the country, some of them hidden. But hitting well chosen targets could set back Iran's nuclear ambitions for years. Political analyst Gerald Steinberg, a professor at Israel's Bar Ilan University, said a perception that the U.S. was backing away from preventing Iran from acquiring nuclear weapons could add to Israeli decision makers' concerns that the U.S. isn't going to take action, and so Israel should.But Israel has not broadcast an urge to attack. Prime Minister Benjamin Netanyahu has long urged concerted international action, including tougher sanctions, and hard-line Foreign Minister Avigdor Lieberman has said that Israel would not attack Iran just to do the work of others. Lieberman is visiting South America, and the Foreign Ministry spokesman in Jerusalem refused to comment on the issue of the umbrella.Associated Press writers Ian Deitch and Jen Thomas contributed to this report.

Israel doesn't see U.S. limiting loan guarantees By Tova Cohen – Thu Jul 23, 7:43 am ET

TEL AVIV (Reuters) – Israel does not expect the United States to limit use of loan guarantees despite a dispute with Washington over building in East Jerusalem or in West Bank settlements, Finance Minister Yuval Steinitz said on Thursday.I don't see any limitations on the horizon. It's not time to be concerned about that, Steinitz told reporters.He added that Israel would prefer not to use them.I don't see any need to use them in the near future,Steinitz said.But it's good they are there.He noted that prior disputes over settlement building have led the United States to deduct rather than cancel the guarantees.In 2002, to help Israel deal with a recession caused by a global downturn and a wave of Palestinian suicide bombings, the U.S. provided a package of $9 billion in loan guarantees, where Israel could sell bonds internationally with the backing of the United States.The guarantees have been instrumental in allowing Israel to raise money more cheaply and in sovereign ratings upgrades by credit rating agencies.Israel still has $3.8 billion left to use by 2011 after already issuing $4.1 billion in bonds backed by the U.S. and a $1.1 billion deduction for Israeli settlement building and concerns over a security fence in the West Bank.Palestinians are looking to set up a state in the West Bank and East Jerusalem, land Israel captured in the 1967 war.

Last month, the United States re-approved Israel's loan guarantee program, subject to Israel meeting fiscal targets. It came despite the most serious rift between Israel and its main ally in more than a decade due to Israel's rejection of U.S. demands to halt settlement building.The tensions have grown as Israel also plans to build apartments in East Jerusalem.In recent years, Israel has opted to issue bonds without U.S. backing. Its latest offering using its own creditworthiness was a sale of $1.5 billion in 10-year notes this past March at 262.5 basis points over U.S. Treasuries.

Steinitz said Israel's economy remained weak but was starting to stabilize.He pointed to positive developments in recent weeks including the first rise in the Bank of Israel's economic performance index in 11 months in June, passing of the 2009 and 2010 state budgets, Standard & Poor's affirming Israel's credit ratings and stabilizing tax collections.He also rejected demands from union leaders for a cost of living adjustment due to a spike in the annual inflation rate to 3.6 percent in June.
Steinitz mainly blamed government tax increases for the rise in the June consumer price index although he said it appeared that consumer demand was starting to improve.

I don't think inflation is starting to rear its head,he said.We need at least a half year to determine if inflation is starting to creep up.(Writing by Steven Scheer and Tova Cohen; Editing by Ron Askew)

Turkish leader presses Israel to return Golan By ALBERT AJI, Associated Press Writer – Wed Jul 22, 1:42 pm ET

DAMASCUS, Syria – Turkey's prime minister said Wednesday his country is prepared to resume mediating in the Arab-Israeli conflict and pressed Israel to return the Golan Heights to Syria.The Turkish leader Recep Tayyip Erdogan also strongly reprimanded Palestinians for the divisions between the West Bank-based Palestinian Authority and Hamas militants who run the Gaza Strip.(Palestinian) brothers are living apart from each other... What kind of brotherhood is that? he asked.Erdogan helped mediate last year in four rounds of indirect peace negotiations between Israel and Syria. But Syria suspended them in December over Israel's military offensive in Gaza.

Unfortunately, with the Gaza incidents, this process was obstructed. Our wish would be that this not be obstructed, and this negativity be removed by returning Syria's rights,Erdogan said after meeting with President Bashar Assad in the northern Syrian city of Aleppo.Before he left Turkey, Erdogan reiterated his country's readiness to help restart indirect talks between Syria and Israel. Turkey has also offered to mediate in other tracks of the Arab-Israeli peace process.New requests regarding this process may come up. ... In fact, they have already started to come,Erdogan told a news conference. He did not say who made the requests.Syria has said it is willing to resume the Turkish-mediated talks if they focus on a complete Israeli withdrawal from the Golan Heights, captured in 1967. But Israeli Prime Minister Benjamin Netanyahu has said he is not willing to cede the territory Syria wants.A government newspaper, Al-Thawra, said in an editorial Wednesday that Syria wants to restore all of Golan and would not agree to start negotiations from scratch.It's not in the interest of peace to waste time or efforts or to return to point zero under the pretext of preconditions,it said in an editorial. Moving toward negotiations means an endorsement of a full withdrawal from the occupied land.Assad said in a newspaper interview in March that the Turkish-mediated talks failed because Israel would not make a clear commitment to return all of the Golan up to the eastern shore of the Sea of Galilee.Assad said Israel wanted to keep some disputed land around the Galilee, its main water source.Israel, for its part, demands that Syria end its support for the Lebanese militant group Hezbollah and the Palestinian Hamas.Direct talks between Israel and Syria under U.S. auspices also failed in 2000 over the extent of an Israeli withdrawal from the Golan.Last month, President Barack Obama's special Mideast peace envoy, George Mitchell, became the highest-level U.S. administration official to visit Damascus since 2005. He acknowledged Syria's clout, declaring Damascus has a key role to play in forging Mideast peace.Associated Press reporters Suzan Fraser and Selcan Hacaoglu in Ankara, Turkey contributed to this report.

Netanyahu says West Bank barrier to stay for now Wed Jul 22, 10:53 am ET

JERUSALEM (Reuters) – Prime Minister Benjamin Netanyahu rejected on Wednesday any notion he would order Israel's barrier in the West Bank to be torn down in response to the absence of Palestinian attacks from the occupied territory.The separation fence will remain in place and will not be dismantled, Netanyahu said in a speech in parliament.I hear they are saying today that because it's quiet, it's possible to take down the fence. My friends, the opposite is true,he said.It's quiet because a fence exists.Netanyahu made the comments after Israel's Maariv newspaper said Palestinian officials had pressed Washington to push for the barrier to be dismantled because of an improved security situation in the West Bank.Palestinian chief negotiator Saeb Erekat told Reuters he had approached the United States on the issue. The Israelis know that the wall adds to the complexities. It's part of the problem and not part of the solution,he said.Israeli leaders have portrayed the barrier as a temporary obstacle that could be moved once a peace agreement with the Palestinians was signed and attacks on Israel ceased.In his speech, Netanyahu said Israel welcomed a certain improvement in the functioning of Palestinian security forces in the West Bank. But he added: The fence is important.Work on the barrier began in 2002, the height of a Palestinian uprising. Israel said the project was necessary to stop suicide bombers from reaching its cities. Palestinians called it a land grab that could deny them a viable state.There has been a dramatic drop in the number of attacks in Israel over the past several years, a decrease security experts attribute to the barrier, Israeli and Palestinian Authority security steps and a change of tactics by some militant groups.No suicide bombers have struck this year. In 2008, one person was killed in Israel by a bomber whom authorities said infiltrated from the West Bank through an area where the barrier had not been completed.The International Court of Justice, in a non-binding decision in 2004, said the barrier was illegal and should be taken down because it crossed occupied territory.The barrier, mainly razor-wired tipped fences but also comprised of towering concrete walls, snakes through land Israel captured in a 1967 war.(Additional reporting by Mohammed Assadi in Ramallah, Writing by Jeffrey Heller, Editing by Elizabeth Fullerton)(For blogs and links on Israeli and Palestinian news, go to http://blogs.reuters.com/axismundi)