Settlement row casts gloom over Israeli-Palestinian peace talks

A second round of US-sponsored Israeli-Palestinian peace talks started yesterday in Egypt but yielded little progress on the issue of West Bank settlements that may derail the negotiations.

Washington's Middle East envoy, the former US senator George Mitchell, reiterated US calls for Israel to extend a 10-month freeze of Jewish construction in the occupied West Bank that expires at the end of this month. The Palestinian delegation, led by the Palestinian Authority President, Mahmoud Abbas, is threatening to leave the talks if construction resumes.

But the Israeli Prime Minister, Benjamin Netanyahu, is under heavy pressure from his pro-settler governing coalition and has ruled out an extension of the freeze, although he has hinted a large-scale construction will not take place.

Mr Mitchell said both sides had begun "serious discussion" and were moving in the right direction. But the talks are taking place amid an atmosphere of pessimism among Israelis: a new poll showed that more than 70 per cent of them do not expect a peace deal.