The New Nation - Internet Edition

AFP, Jerusalem

Israeli and Palestinian negotiators made no headway on Monday in the second round of talks since the relaunch of the Middle East peace process, with the issue of Israeli settlements overshadowing the talks, officials said. Teams headed by Foreign Minister Tzipi Livni and Palestinian ex-premier Ahmed Qorei huddled for several hours late in the day at a Jerusalem hotel in what senior negotiator Saeb Erakat said was a "very difficult" encounter.

"Without a stop to settlement activity we cannot begin the final negotiations and we refused to start negotiations on final issues until this happens," Erakat told AFP.

A senior aide to Livni told AFP that during Monday's talks "the Palestinians demanded a total settlement freeze, while the Israeli side demanded the Palestinians implement their commitment to crack down on militant groups and improve security in the West Bank as well as Gaza."

The day before, officials said that Israel earmarked budget funds to expand two settlements in occupied Palestinian territory next year -- the second expansion since peace talks were revived at a US conference in November.

The Palestinians slammed the move, warning that continuing Israeli settlement activity could derail the relaunched peace efforts.