Israel,Egypt and Jordan to discuss Arab peace plan

JERUSALEM, May 7 (Reuters) Israeli Foreign Minister Tzipi Livni plans to hold initial talks in Cairo on Thursday with the foreign ministers of Egypt and Jordan about an Arab peace initiative, officials said today.

The Arab League named Egypt and Jordan to a working group which would contact Israel over the initiative that offers it normal relations with the Arab world in return for a Palestinian state and full withdrawal from land seized in a 1967 war.

''It's the first formal session,'' one Israeli official said.

Political turmoil in Israel that threatens Prime Minister Ehud Olmert's government has delayed initial talks with the Arab League working group, diplomats involved in the matter said.

Livni joined public calls last week for Olmert to step down following the release of an official report sharply criticising his handling of last year's war in Lebanon, but she remains in the shaky government for now.

An Israeli Foreign Ministry official said Livni's talks in Cairo were expected to focus on the Arab peace initiative and ''to see if it's possible to move forward.'' The talks were scheduled before the release of the Lebanon war report a week ago.

Foreign Ministry spokesman Mark Regev declined to comment on the meetings, but said: ''Moderate Arab leaders, of course they can't replace the Palestinians as partners in peace, but they can provide an atmosphere that is conducive to moderation.'' Washington has been trying to promote the Arab League peace initiative in the hope it might bring states like Saudi Arabia, which do not recognise Israel, to deal publicly with the Jewish state and to help support Israeli-Palestinian talks.

Olmert and Palestinian President Mahmoud Abbas have agreed to meet bi-weekly, though the talks have largely been restricted to day-to-day issues.

The leaders are scheduled to meet next in the West Bank city of Jericho, but those talks have been postponed due to political uncertainties on the Israeli side, officials said.

First launched in 2002, the Arab initiative calls on Israel to withdraw from all land occupied in the 1967 conflict, to reach an ''agreed, just'' solution for Palestinian refugees and to accept a Palestinian state in the West Bank and Gaza Strip with East Jerusalem as its capital.

In return, Arab states would establish normal relations with the Jewish state.

Olmert has said he sees positive points in the plan, although Israel opposes the return of Palestinian refugees to their former homes in what is now the Jewish state and wants to retain some of the major settlement blocs in the West Bank.

Reuters SYV VV1429