Abbas, Olmert meet but no sign of progress

JERUSALEM, Mar 11 (Reuters) Israeli Prime Minister Ehud Olmert and Palestinian President Mahmoud Abbas held talks today that yielded no immediate sign of progress towards peace.

Hours before hosting Abbas at his Jerusalem residence, Olmert appeared to open the door to exploring whether a Saudi peace initiative launched in 2002 could serve as the basis for a future Israeli-Palestinian settlement.

Olmert has vowed to boycott the Palestinian unity government Abbas is forming with Hamas Islamists unless it recognises Israel, renounces violence and accepts existing interim peace deals as demanded by the Quartet of international powers.

Olmert and Abbas met for nearly 2-1/2 hours and spent part of the session in one-on-one talks, without aides present, an Israeli official said. The two leaders made no statements at the start or the end of the meeting.

''Olmert and Abbas agreed to continue to talk on a regular basis,'' the Israeli official said.

Last month's Saudi-brokered Palestinian coalition agreement that calmed weeks of warfare between Hamas and Abbas's Fatah faction contains a vague promise to ''respect'' previous Israeli-Palestinian accords.

But it does not commit the incoming government to abide by those pacts, nor to accept international conditions key to resumption of aid to the Palestinian Authority, which was cut off by the West after Hamas came to power a year ago.

Palestinian Prime Minister Ismail Haniyeh, a Hamas leader, said a government could be announced as early as tomorrow.

Olmert has promised to keep a channel of communication open with the moderate Abbas, a policy promoted by the United States, which plans to send Secretary of State Condoleezza Rice back to the region in the next few weeks.

Al Qaeda's second-in-command Ayman al-Zawahri lashed out at the leadership of Hamas over its deal with Fatah.

''The leadership of Hamas surrendered to the Jews most of Palestine'' to keep heading the Palestinian government, said the militant leader in an audio statement, parts of which were aired by Al Jazeera television.

ARAB LEAGUE In broadcast remarks before the session, Olmert looked ahead to an Arab League summit in Saudi Arabia at the end of the month and repeated that Israel saw ''positive elements'' in the Saudi peace initiative adopted by the group five years ago.

Speaking to his cabinet, Olmert said he hoped those elements would be reaffirmed at the Riyadh discussions, a reference to the plan's offer of normal diplomatic relations with Israel.

''We said more than once that the Saudi initiative is a subject we would be willing to treat seriously,'' he said.

The proposal, however, came with terms Israel has said it could not accept: withdrawal from all territories captured in the 1967 Middle East war and the return of Palestinian refugees to what is now the Jewish state.

Palestinian officials said changing the plan would not be on the Arab League summit's agenda.

Hamas leaders have offered a long-term truce with Israel in return for a viable Palestinian state. The group continues to say it will not formally recognise Israel and its 1988 founding charter calls for the destruction of the Jewish state.

Despite the unity deal, a Hamas gunman was killed in a clash with Fatah militants in the Gaza Strip, the first such fatality since the agreement was signed in Mecca on February 8.

REUTERS MS RAI2347