The New Nation - Internet Edition

AFP, Jerusalem

US Secretary of State Condoleezza Rice, on a new bid to inject impetus into the faltering Middle East peace process, warned on Sunday that Jewish settlement expansion could harm the talks.

Rice said she would use her latest visit-her 17th to the region in less than two years-to press Israel to curb settlement growth on occupied Palestinian land. "I am very concerned that at a time when we need to build confidence between the parties, the continued building and the settlement activity has the potential to harm the negotiations going forward," she told reporters.

Israel decided last week to build another 1,300 houses for Jewish settlers in occupied and annexed east Jerusalem, which the Palestinians want as their future capital.

Since the US-backed peace talks were formally relaunched in November they have been hobbled by the continued settlements projects, violence in the Hamas-ruled Gaza Strip and a growing Israeli political crisis.

"The situation in the Middle East, like always, is complicated," Israeli Foreign Minister and chief negotiator Tzipi Livni told reporters ahead of a meeting with Rice.

"And while negotiating with the Palestinians, we need to address also difficulties on the ground, especially the situation in Gaza Strip, which is being controlled by Hamas as you are well aware."

Rice was to meet Israeli Prime Minister Ehud Olmert and Palestinian president Mahmud Abbas later in the day.

The two leaders renewed their commitment to the internationally drafted 2003 peace roadmap at the relaunch of negotiations at a US conference in November following a near seven-year hiatus.

Under the roadmap the two sides agreed to end violence and freeze settlement construction, but Israel has insisted on its right to build in east Jerusalem and settlement blocs, which it aims to keep in any future peace agreement.

"Ramat Shlomo is the heart of Jerusalem," ultra-Orthodox Shas party Minister Yitzhak Cohen said, referring to the east Jerusalem neighbourhood where the 1,300 houses are to be built. "If that is considered a settlement then what is Israel? Rice's criticism is unnecessary," he added.

Negotiations have also been overshadowed by a political crisis in Israel springing from a probe into Olmert's past financial dealings that threatens his political future and the survival of his fragile coalition. On Sunday, Rice will also meet Israeli Defence Minister Ehud Barak, who has warned that his Labour party would join the opposition in voting to dissolve parliament if Olmert's Kadima party does not name a new prime minister. She will hold a three-way meeting with Barak and Palestinian prime minister Salam Fayyad on Monday to discuss efforts to boost the West Bank economy.

Rice said she will also press Israel to take concrete steps to ease freedom of movement in the occupied West Bank, including lifting more of the over 500 roadblocks and checkpoints scattered across the territory. "But it is not enough and there certainly and clearly needs to be more," she told reporters ahead of her arrival in Israel late Saturday.

"I understand the security considerations as well as anyone but the obligation was undertaken to improve the lives of the Palestinians."

Her visit comes a year after Hamas's bloody takeover of Gaza, where Israel is mulling whether to launch a major offensive to halt rocket fire despite Egyptian efforts to forge a truce.

A top Israeli official told AFP there had been "significant progress" in negotiations but that the truce would not include the release of captured Israeli soldier Gilad Shalit.

Representatives of Hamas are in Cairo on Sunday to receive Israel's response to the Egyptian-mediated ceasefire proposal. Rice will travel on Sunday to the West Bank to meet Abbas before returning to Jerusalem to dine with Olmert. She will also hold a joint meeting with the heads of the negotiation teams-Palestinian chief negotiator Ahmed Qorei and Livni, who is widely favoured to succeed Olmert as prime minister and Kadima party leader in the absence of early elections.