WASHINGTON, Nov 26 (Reuters) Israeli and Palestinian negotiators neared an agreement today on a peace agenda as President George W Bush launched a new drive to restart long-dormant talks to create a Palestinian state.
Expectations were low for three days of meetings in Washington and nearby Annapolis, Maryland, partly because Bush, Israeli Prime Minister Ehud Olmert and Palestinian President Mahmoud Abbas all face political challenges at home.
Bush, beginning his biggest attempt at West Asia peace with only 14 months left in office, held Oval Office talks with Olmert and planned a separate session with Abbas later.
Bush told Olmert he was looking forward to a serious dialogue with the two leaders ''to see whether or not peace is possible.'' He said he was optimistic about the outcome. He is to meet the two leaders together tomorrow in Annapolis.
Olmert said he hoped to launch ''a serious process of negotiations''. ''This time it is different,'' he said, hailing what he described as ''very important'' international participation in the conference.
Despite long-standing frictions, Israeli and Palestinian officials said they were close to agreement on a joint document that would outline the peace goals to follow this week's sessions.
A top aide to Abbas, Yasser Abed Rabbo, predicted an announcement today or tomorrow on the joint document and said: ''There will be extensive meetings and efforts in order to reach this document.'' Israeli officials said negotiators had narrowed some of their differences over the document, which will chart the course for negotiating the toughest issues of the conflict -- Jerusalem, borders, security and Palestinian refugees.
State Department spokesman Sean McCormack said both sides were ''converging'' on a document.
Syria and Saudi Arabia have promised to attend the Annapolis talks tomorrow, joining envoys from more than 40 countries at the US Naval Academy, making the conference one of the most sweeping efforts in years.
A senior Israeli official played down the chances of any direct talks -- or even an exchange of hand shakes -- between Israeli and Saudi or Syrian leaders during the conference.
''They (Arab leaders) won't do it until they get something concrete from Israel,'' the official said on condition of anonymity.
Washington says the hard work will begin only after this week, when Israelis and Palestinians must tackle the issues at the core of the conflict.
In a reminder of the tit-for-tat violence that has caused havoc in the region for decades, a Palestinian Hamas militant was killed and four others were wounded Monday by an Israeli missile strike in the northern Gaza Strip.
In Jerusalem's Old City, at least 15,000 Israelis opposed to this week's talks gathered at the Western Wall to pray and protest against the Annapolis meeting.
US Secretary of State Condoleezza Rice has put her credibility on the line for the conference. She argues Annapolis would be an opportunity for Israel and Sunni Arabs to close ranks against regional ''extremism'' -- an apparent allusion at least in part to Iran's nuclear program.
Iran has condemned Annapolis as a ruse for aiding Israel.
''All politicians in the world are aware that this conference is doomed to failure,'' Iranian Supreme Leader Ayatollah Ali Khamenei said a televised speech in Tehran.
CLINTON TO BUSH The Annapolis bid follows years of failed US-brokered efforts, the last by Bush's predecessor Bill Clinton, to end decades of conflict and forge a Palestinian state.
A senior aide to Abbas, Nabil Shaath, told Reuters that after Annapolis, Israelis and Palestinians would pick up from principles already agreed on during the Clinton administration.
White House national security adviser Stephen Hadley said he expected both sides to recommit to a 2003 ''road map'' which provides benchmarks that include a cessation of Jewish settlement in the West Bank occupied by Israel in a 1967 war as well as a Palestinian crackdown on militants.
The United States argues the timing is right to relaunch negotiations despite the challenges faced by the key players.
Abbas in June lost control of the Gaza Strip to Hamas Islamists, who were not invited to Annapolis and who said any decisions to emerge will not be binding.
Olmert's domestic standing has been sapped by corruption scandals and Israel's Lebanon war, and he faces opposition to concessions from rightists in his fragile governing coalition.
Bush, weakened by the unpopular Iraq war, leaves office in January 2009, and the campaign to succeed him is in full swing.
REUTERS JT RAI2338