Israel's Barak sees 'practical' solution to US spat

Israel can resolve its dispute with the United States over West Bank settlements, perhaps as part of a wider drive for Middle East peace, Israeli Defense Minister Ehud Barak said on Wednesday, Reuters reported.

The Obama administration insists Israel freeze settlement so negotiations on Palestinian statehood can progress, dismaying the Israeli government, which wants to keep building in West Bank enclaves it intends to keep under any future accord.

"I don't think the United States of America is looking for impractical solutions to real problems," Barak said after talks this week with President Barack Obama and U.S. officials.

"I don't think it's about yielding, or that one side should capitulate to the other. I propose to reduce the volume of the public discourse about it and focus about a package that Israel can support," he told reporters.

A U.S.-sponsored 2003 peace "road map" requires Israel to stop expanding the settlements, whose presence on occupied land the World Court deems illegal.

"Israel basically supports the Obama initiative for a regional peace process and we clearly took upon ourselves a commitment to live up to the agreement signed by previous (Israeli) governments," Barak said.

But Israel says former U.S. President George W. Bush tacitly agreed that new settler homes could go up to match population growth, and right-wing Israeli Prime Minister Benjamin Netanyahu has insisted that such construction would continue.

Barak's visit came as Obama, who champions the idea of a sweeping Middle East peace accord, prepared to deliver a much-awaited address on Thursday to a Muslim world aggrieved by decades of Palestinian plight.

Obama has avoided openly rebuking Israel. But in a New York Times interview he spoke of Israelis "who recognize that their current path is unsustainable, and they need to make some tough choices on settlements to achieve a two-state solution ... but not enough folks are willing to recognize that publicly."

The impasse over settlements risks sapping Middle East peace proposals like a pan-Arab offer to recognize Israel if it relinquishes the West Bank and other territories captured in a 1967 war, and accepts a settlement for millions of Palestinian refugees.

Many in Netanyahu's rightist coalition see the West Bank as an eternal Jewish birthright. Security hawks worry that Hamas, a Palestinian Islamist movement, could take over the territory if the Israelis withdraw.

U.S. officials have argued that through rapprochement with the Arabs, Israel would undercut Iran, whose nuclear program is a regional concern. But Israel is reluctant to give ground to Hamas, an Iranian ally that ousted the forces of U.S.-backed Palestinian President Mahmoud Abbas from the Gaza Strip in 2007.

Barak anticipated no cuts to some $3 billion in annual U.S. defense aid to Israel, or to loan guarantees granted by Washington on condition the money not be spent on settlements.

"I have emerged from these talks more optimistic," he said.

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