Obama calls joint talks with leaders of Israel and Palestine

Barack Obama will hold a joint meeting with the Israeli Prime Minister, Benjamin Netanyahu, and the Palestinian Authority President, Mahmoud Abbas, on Tuesday to help restart peace talks between the two sides, the White House said last night.

The US President, who will be in New York for the UN General Assembly this week, will meet with each leader separately before convening the joint session. The US Middle East envoy, George Mitchell, who is credited with helping the Northern Ireland peace process, recently returned from a shuttle diplomacy trip to Jerusalem and Arab capitals.

But the gulf that any renewed peace negotiations would have to bridge are wide. The key disputes are over the expansion of Israeli settlements and whether peace talks should begin where they left off under Mr Netanyahu's predecessors. Israel has baulked at an American demand that it freeze settlement construction in the West Bank and east Jerusalem. Under a US-sponsored plan from 2003, Israel is required to freeze all such construction.

Instead, Mr Netanyahu wants to continue building about 3,000 homes, while offering to curtail other construction for several months. Nearly half a million Israelis have moved to the West Bank and east Jerusalem since Israel captured the territories in the 1967 Six Day War. Palestinians fear the growing settlements will make a viable Palestinian state impossible.

Mr Abbas insists on a freeze, said Saeb Erekat, his chief negotiator, after the Palestinian President met former senator Mitchell on Friday. "We once again reiterated that there are no middle-ground solutions for settlements. A settlement freeze is a settlement freeze," Mr Erekat said. The Palestinians also demand that negotiations resume on the same terms as previous rounds with Mr Netanyahu's predecessor, Ehud Olmert. This would include Israel's willingness to discuss all so-called core issues, including a partition of Jerusalem. Mr Netanyahu has said that Jerusalem is off-limits in negotiations, and his proposed settlement slowdown does not include the city.

Over four days, Mr Mitchell met twice with Mr Abbas and four times with Mr Netanyahu. A senior Israeli official said wide gaps remained, but would not comment on the content of the meetings. It appears unlikely, however, that Mr Netanyahu would change his mind about settlement expansion. In recent days, his government announced bids for hundreds more homes in the West Bank and east Jerusalem.

Several senior aides urged Mr Abbas not to sit down with Mr Netanyahu without having set the terms for negotiations, arguing that otherwise it would be seen as a sign of weakness and hurt his standing at home. Mr Abbas is locked in a power struggle with the Islamic militant group Hamas, which overran the Gaza Strip in 2007, leaving him in control of the West Bank. Hamas has used lack of progress in negotiations to try to discredit Mr Abbas.

The Hamas legislator Mushir al-Masri told a rally in the Gaza town of Beit Lahia on Friday that talks are a waste of time. "The choice of negotiations has proven a failure, and it's time that Palestinian negotiators abandon this worthless and destructive tool and go back to holy war," he said.

In other developments, the World Bank warned that donor countries will have to keep giving large amounts of aid to the Abbas government, unless Israel eases access for Palestinian goods to Israeli and world markets. Senior representatives of the donor countries meet next week to review their aid programme to the Palestinians.

In recent months, Israel has eased some restrictions inside the West Bank, prompting modest economic growth. However, the West Bank and Gaza remain cut off from each other, and West Bank exports are hampered by slow movement at Israeli crossings. The Abbas government is still short of money, the bank said, citing a $400m (£245.7m) financing gap for this year.