Rice starts West Asia trip, sees no breakthroughs

JERUSALEM, Oct 14 (Reuters) US Secretary of State Condoleezza Rice began a West Asia visit today by playing down the chances of major progress on Israeli-Palestinian peace during her four days of talks with officials from both sides.

Rice travelled to the region to prepare for an international meeting the United States plans to host this year that it hopes will lead to formal peace negotiations and, eventually, the creation of a Palestinian state.

Israeli and Palestinian teams are holding meetings to hammer out a joint document addressing ''core issues'' for the gathering, expected to be held late next month in Annapolis, Maryland.

''I don't expect ... that there will be any particular outcome in the sense of breakthroughs on the document,'' Rice told reporters as she flew to Tel Aviv. ''This is really a work in progress.'' Rice met Israeli Prime Minister Ehud Olmert and Defence Minister Ehud Barak and planned to have dinner with Palestinian Prime Minister Salaam Fayyad to try to gauge how much progress they have made on the document.

Statements from both sides suggested major gaps remained.

Olmert told Rice that it was his ''clear hope'' a joint statement would be agreed in time for the conference but added ''that's not a condition for the meeting taking place,'' Olmert spokeswoman Miri Eisin said.

The negotiations have stirred opposition from Olmert's right-wing coalition partners. One cabinet minister told Rice that major peace moves at the conference could threaten Olmert's government.

Olmert has sought to address in general terms the most divisive aspects of the West Asia conflict -- borders of a Palestinian state, the future of the holy city of Jerusalem, and the fate of millions of Palestinian refugees.

IMPACT ON ISRAELI GOVERNMENT? Palestinian President Mahmoud Abbas has been pressing for a document with a timetable for dealing with those issues and moving Palestinians closer to statehood.

''The success of Rice's efforts requires reaching a clear statement that will include the final-status issues, in addition to stopping the settlement projects that aim to isolate Jerusalem and divide the West Bank,'' said Nabil Abu Rdainah, an Abbas aide.

Olmert told his cabinet that he expected the conference to be followed by ''discussions on the possibility of founding a Palestinian state.'' But he said that ''setting a timetable for this process in advance would create more problems than it would solve.'' Rice also plans to meet Abbas in the West Bank during her visit, which is expected to include a trip to Egypt on Tuesday and talks in London with Jordan's King Abdullah on Thursday.

Today, Rice met senior politicians across the Israeli political spectrum, including Industry and Trade Minister Eli Yishai of the ultra-Orthodox Shas party who said he told her ''Jerusalem should not be included in the discussions.'' ''I have the feeling that from conference to conference there are more and more concessions. If at the end of the conference in Annapolis fundamental issues will be agreed upon, it could shake up the government,'' Yishai said after the meeting.

Olmert named Foreign Minister Tzipi Livni, a political rival who has warned against moving too fast towards an agreement, as chief Israeli negotiator on the joint document.

Rice warned Israel against taking steps that could undermine confidence, alluding to Israel's confirmation last week that it was building a new road near the West Bank settlement of Maaleh Adumim on the outskirts of Jerusalem.

The Israeli army said the road would help connect Palestinian communities. Palestinian officials accused Israel of creating ''facts on the ground'' before peace talks.

''We have to be very careful, as we are trying to move toward the establishment of a Palestinian state, (about) actions and statements that erode confidence,'' she said. ''This is a very delicate time.'' REUTERS SYU BST2229