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Last Updated: Wednesday, 28 November 2007, 00:28 GMT
New Mid-East peace drive launched
Ehud Olmert, George W Bush, Mahmoud Abbas (left to right) at Annapolis - 27/11/2007
Mr Bush wants a peace deal agreed before he leaves office

Israeli and Palestinian leaders have agreed to start talks aimed at reaching a full peace deal by the end of 2008.

Opening a Middle East peace conference, US President George W Bush said all outstanding issues dividing the two sides would be on the table.

Palestinian Authority President Mahmoud Abbas said the talks must include the status of Jerusalem as a Palestinian capital, and the future of refugees.

Israeli PM Ehud Olmert said Israel was prepared to make compromises for peace.

Standing before the diplomats from more than 40 countries and international agencies at the US naval academy at Annapolis, Maryland, President Bush stepped back to allow the Palestinian and Israeli leaders to shake hands.

"We agree to engage in vigorous, ongoing and continuous negotiations and shall make every effort to conclude an agreement before the end of 2008," Mr Bush said, reading from a statement agreed by the two sides.


He said the first negotiations would start on 12 December, with further meetings to be held every two weeks after that.

He committed himself to spending the rest of his presidency - until January 2009 - working towards "an independent democratic viable Palestinian state".

"Such a state will provide Palestinians with the chance to lead lives of freedom, purpose and dignity," Mr Bush said.

"And such a state will help provide Israelis with something they have been seeking for generations: to live in peace with their neighbours."

'Time has come'

Mr Abbas followed with his own speech, saying: "We have to start comprehensive and deep negotiations on all issues of final status, including Jerusalem, refugees, borders, settlements, water and security and others".

This window of opportunity might never open again
Mahmoud Abbas
Palestinian president

He said East Jerusalem should be the capital of the new Palestinian state, something deeply opposed by many Israelis who regard it as part of their own capital.

Mr Olmert said he had come to Annapolis despite the obstacles posed by continuing violence against the people of Israel.

But he added that the "time has come... we want peace".

Mr Olmert agreed that all the core issues dividing the two sides would be on the table, and that Israel would assist Palestinian refugees find a future in the new Palestinian state.

Following the speeches, the delegates at Annapolis broke into sessions for further discussions.

In a closing news conference, a tired-looking US Secretary of State Condoleezza Rice said the event had demonstrated "unambiguously" that the new initiative had international support.

"No one believes failure is an option," she said.

Ms Rice is reported to have made 36 phone calls to world leaders over last weekend as part of efforts to achieve results at the conference.

Nations will be asked to provide financial support for Palestinian aid programmes at a donors' conference in Paris in mid-December.

Low expectations

Anti-Annapolis rally in Ramallah, West Bank - 27/11/2007
In Ramallah, Palestinians protested against the conference

Observers say the fact that the summit is being hosted by the US and has attracted the participation of Saudi Arabia and Syria, two Arab states that do not recognise Israel, is critical to its chances for success.

But expectations going into Annapolis have been low because every other attempt at negotiation between the Israelis and the Palestinians has failed, says the BBC's Jeremy Bowen at the conference.

However, there are grounds for optimism, says our correspondent: the Americans are behind the talks, there is no plan B and the consequences of failure could be bloody.

Wider tensions

The absence of Palestinian faction Hamas, which is designated a terrorist organisation by the US, the EU and Israel, could also make negotiating a deal problematic.

Hamas controls the internal affairs of the Gaza Strip and says it will not be bound by anything decided in Annapolis.

1400 GMT (0900 Washington time): Arrivals
1440-1530 GMT: Closed meeting between Bush, Olmert and Abbas
1600 GMT: Speeches by all three leaders
1700 GMT: Three sessions on international support, economic and institutional development and regional peace
0030 GMT: End of meeting press conference

In Gaza on Tuesday tens of thousands of people joined a rally protesting against the talks, many of them chanting "Abbas is a traitor" and "We will not recognise Israel".

And in the West Bank, controlled by Mr Abbas's Fatah faction, Palestinian security forces broke up several protests against the Annapolis gathering. One man was killed in Hebron, Palestinian medical officials said.

In Jerusalem, Israelis gathered at the Western Wall on Monday to protest against the conference.

Israeli opposition leader Benjamin Netanyahu labelled the meeting "a continuation of one-sided concessions".

The wider tensions in the Middle East are also a concern, with many fearing that problems with Iraq, Iran and Lebanon could derail any peace process, our correspondent says.

Mr Abbas and Mr Olmert have said say they are ready and willing to negotiate, our correspondent says - the question is, whether events and some of their own people will let them.

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