Israel must halt settlements: Egypt

CAIRO (AFP) - Israeli Defence Minister Ehud Barak said on Sunday that more needs to be done for the creation
of a Palestinian state, including Arab recognition of Israel as a Jewish state.
Barak was speaking after talks with Egyptian President Hosni Mubarak, intelligence chief Omar Suleiman -
Egypts pointman for Palestinian affairs - and Defence Minister Hussein Tantawi during a brief visit to Cairo.
Mubarak said a peace deal was within reach but that Israel must stop settlement activity in the occupied West
Bank, an increasingly vocal demand of the Jewish states principal ally the United States.
More steps must be taken in order to reach a situation where it is possible for Israelis and Palestinians to live in
two states side by side in peace and with mutual respect, Barak told reporters after the talks.
He said intense efforts will be exerted over the coming weeks to pave the road for the way forward. But Barak
stressed that any final settlement of the Palestinian question must include respect for the nature of Israel as a
state for the Jewish people.
The two also discussed the situation in Iran and Lebanon, Barak told reporters.
The pan-Arab daily Asharq Al-Awsat quoted Israeli sources as saying that a new development has led to
tangible progress, without elaborating on its nature.
The most important issue to be discussed is the prisoner exchange, the Paper said.
A senior official at Israels Defence Ministry told AFP that during the talks the Egyptians also raised the topic of
opening more crossings between Israel and Gaza. Barak promised to work towards progress on the issue.
Meanwhile, Israel plans to allocate 250 million dollars over the next two years for settlements in the occupied
West Bank despite US pressure to halt settlement activity, army radio said on Sunday. The figure is contained in
the 2009-2010 budget, which passed its first reading in the Knesset parliament last week, it said.
Some 125 million dollars is to be used for various security expenses, with most of the rest destined for housing
construction, it said. The Peace Now anti-settlement watchdog said that the settlement spending in the two-year
budget was likely to be higher and spread over several sections of the budget.
The official figures are nothing but the tip of the iceberg and the Israelis will pay not only a political price for the
settlements, but also an economic one, the head of the group Yariv Oppenheimer said.
Israels two-year 159-billion-dollar budget must pass two more readings in the Knesset.
The United States has been pressing Israel to stop all activity in West Bank settlements, which the international
community considers illegal and which are among the main obstacles in the stalled Middle East peace process.
Israeli Prime Minister Benjamin Netanyahu has refused to bow to the US demands, vigorously opposed by most
of his largely right-wing government, saying that construction for population increases would continue.
More than 280,000 Israelis live in settlements in the West Bank, which Israel captured from Jordan in the 1967
Six Day War.