Israel agrees to prisoner release but not border demands

JERUSALEM (Reuters) - Israeli Prime Minister Benjamin Netanyahu's tentative agreement to revive U.S.-sponsored peace talks with the Palestinians met skepticism and scorn on Sunday from some members of his rightist coalition government, including within his own party.

With no date yet set for negotiations to begin, let alone a public blueprint for their terms, Netanyahu did not yet appear at risk of a political crisis. Rare praise for him from the center-left opposition suggested they were willing to replace any nationalist allies he might lose over a future peace accord.

Netanyahu and Palestinian President Mahmoud Abbas have been tight-lipped about the prospective talks, in keeping with the discretion requested by U.S. Secretary John Kerry, who announced the breakthrough on Friday after months of intensive mediation.

Washington hopes to host Israeli and Palestinian negotiators within a week for the launch of "final-status" talks on founding a Palestinian state alongside the Jewish state, in territories the latter captured in the 1967 Middle East war.

But Netanyahu's partner in the ruling Likud Beitenu faction, Avigdor Lieberman, ridiculed the idea that anything more than an interim accord might be achieved in the decades-old conflict.

"It's important to negotiate, and even more important for negotiations to be predicated on realism and not illusions," Lieberman wrote on Facebook. "There is no solution to the Israeli-Palestinian conflict, at least not in the coming years, and what's possible and important to do is conflict-management."

Transport Minister Yisrael Katz of Likud mocked Abbas, whose U.S.-backed administration holds limited sway in the occupied West Bank while the Palestinian enclave of Gaza is controlled by Islamist Hamas rivals opposed to co-existence with Israel.

"Abu Mazen (Abbas) rules over Palestinians less than (President Bashar) Assad rules in Syria," Katz told reporters, referring to the more than two-year-old Islamist-led insurgency wracking Damascus, another enemy of the Jewish state.

"Just as no one would consider ceding any territory to Assad in the current situation, so certainly no one is thinking seriously of ceding territory to Abu Mazen at time when he doesn't completely rule over most of the Palestinian population."

Israel said on Saturday, however, that it would meet Abbas's call to free scores of Palestinian prisoners held since before the sides began diplomatic contacts in 1993.

Negotiations have waxed and waned since, last breaking down in late 2010 when an Israeli moratorium on settlement construction in occupied territory expired.

DIFFICULT DECISIONS

Challenged in the past over domestically divisive issues like whether to engage the Palestinians or to go to war over Iran's nuclear program, Netanyahu has sought to reassure Israelis that he was strong enough to make difficult decisions.

"The negotiations will not be easy," he told his cabinet on Sunday in remarks aired by Israeli broadcasters.

"But we are entering them with integrity and frankness in the hope that this process will be handled responsibly, in a serious and purposeful manner - and I have to say, at least during the first stages, discreetly."

He repeated past pledges to put any accord to a national referendum. Opinion polls reflect majority Israeli support for a two-state solution with the Palestinians, though less so for removing Jewish settlements in the occupied West Bank.

A weaker-than-expected showing in a January general election meant Likud Beitenu had to cobble together a coalition with upstart parties like the religious-nationalist Jewish Home, which opposes Palestinian sovereignty and champions settlements.

Economy Minister Naftali Bennett, leader of Jewish Home, threatened last week to quit the government should it accept, as a basis for negotiations, the Palestinians' demand that the borders of their state approximate the West Bank and Gaza lines.

But he sounded more circumspect on Sunday, apparently reassured by Israel's statements that it would be under no "preconditions" for the talks, including a long-standing Palestinian call for a freeze on settlements in the West Bank and East Jerusalem.

"Our insistence on our principles has paid off," he said in a statement. "With the start of negotiations, we will insist on continuing normal life and building in Jerusalem and Judea and Samaria (West Bank) ... We embark on this journey with caution and with our eyes open. Naive, we are not."

Israeli political commentators noted that Jewish Home, one of whose ministers holds the housing portfolio, had complained for months about a de facto slowdown in settlement construction ordered by Netanyahu - yet stayed in government.

Were the party to quit in protest at an eventual Palestine treaty, Netanyahu could expect to find center-left Labor, which currently heads the Israeli political opposition, as a stand-in.

"We are following these moves with amity and support," Labor leader Shelly Yachimovich told Israel Radio, referring to Netanyahu's willingness to enter talks expected to last months.

"If, during this year, there will be a point when we are on the eve of an accord, truly on the eve of a real, documented drama, and we see the partners from the extreme right leaving Netanyahu's coalition, then certainly we will reconsider entering the government. It is not because of us that peace will be lost," she said.

(Editing by Mark Heinrich)

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