Israelis, Palestinians resume high-level talks

By AMY TEIBEL, Associated Press Writer

JERUSALEM – Israel and the Palestinians held their first high-level talks since Prime Minister Benjamin Netanyahu took office in March, sharing ideas on how to shore up a fledgling Palestinian economic recovery.

The meeting between Israeli Vice Prime Minister Silvan Shalom and Palestinian Economics Minister Bassem Khoury was the latest sign of a thaw in frosty relations. Last week, both sides said Palestinian President Mahmoud Abbas could soon hold his first meeting with Netanyahu, despite Israel's refusal to freeze settlement construction.

The meeting Wednesday at a Jerusalem hotel was the first Cabinet-level encounter between the Netanyahu and Abbas governments. The agenda included easing restrictions on the entry of Palestinian businesspeople and VIPs to Israel; boosting Israeli meat exports to the West Bank and dairy imports from the West Bank to Israel; allowing more Palestinians to seek medical care in Israel; and joint industrial parks, Israeli officials said.

Khoury said he also brought up the movement of goods into and out of the Gaza Strip. The coastal strip, ruled by the rival Hamas militant group, is under an Israeli and Egyptian blockade.

Netanyahu has said he wants to make "economic peace" with the Palestinians, maintaining that prosperity could reduce the risk of violence and pave the way for more substantive talks on resolving the decades-long political conflict.

Many Palestinians fear Netanyahu is using "economic peace" as a fig leaf to avoid reaching a political accord on Palestinian statehood. And critics on both sides have noted that both Palestinian uprisings against Israel ignited at times of unparalleled gains in the struggling Palestinian economy.

"Our objective is economic peace," Shalom told reporters before the meeting. "That doesn't prevent political dialogue, but rather, assists it and gives it momentum."

After the meeting, Khoury said he hoped tangible improvements would follow.

"We hope it will not only be words but there will also be some actions on the ground as well so we can really see the end of these measures that are stifling the growth of the Palestinian economy," he said.

The two sides agreed to meet every four to six weeks and to set up teams to handle day-to-day issues, Israeli officials said.

Economic improvement in the West Bank could boost Abbas, sharpening the contrast to the misery of the impoverished and isolated Gaza Strip, ruled by his bitter rival, the Islamic militant Hamas. Popular support for Abbas has ebbed because he had nothing to show for a year of peace talks with Netanyahu's predecessor, Ehud Olmert.

Privately, some Palestinians concede that Netanyahu has done more to improve conditions for the Palestinians during his five months in office than Olmert did in three years, despite his oft-stated commitment to reaching a peace accord.

Since Netanyahu has taken office, he has taken down some roadblocks and eased other travel restrictions that were imposed years ago to keep militants out of Israel but also choked the Palestinian economy. This has allowed for a smoother movement of goods and a consequent upswing in the West Bank's retail and entertainment sectors.

Earlier this year, the International Monetary Fund predicted that the Palestinian economy could grow by 7 percent this year, its first optimistic forecast in three years.

Despite the recent gestures, significant constraints on movement in the West Bank remain, hobbling growth in industry, exports and investments. Gaza, meanwhile, remains under a tight Israeli and Egyptian blockade that is cracked open just enough to avert a humanitarian crisis.

Peace talks — held until late last year — have not resumed. The Palestinians insist that Israel first freeze settlement activities in the West Bank and east Jerusalem, areas where they hope to establish an independent state. The U.S. has similarly demanded a settlement halt but Israel has refused.

Israeli officials were to meet later Wednesday in New York with George Mitchell, President Barack Obama's Mideast envoy, to discuss the settlement issue.

In the absence of formal peace talks, Abbas aides have said he might meet with Netanyahu on the sidelines of a U.N. meeting later this month.