Mubarak meets Abbas, Netanyahu, Mitchell separately, receives message from Obama

Egyptian president urges Israel leaders to take trust-enhancing steps

Mitchell resumes endeavors as Abu Mazen reiterates rejection of direct negotiations

European program to re-build Gaza Strip’s private sector

U.S. near deal to provide Israel with F-35 fighter jets

Pressure intensified on Palestinian President Mahmoud Abbas to agree to direct talks with Israel as Egypt held separate back-to-back meetings with the two sides Sunday in search of a compromise.

Abbas says he won't negotiate directly with Israeli Prime Minister Benjamin Netanyahu unless Israel agrees to recognize its 1967 frontier as a basis for the borders of a future Palestinian state and accepts the deployment of an international force to guard them. Netanyahu has refused to be pinned down on a framework for negotiations.

In an effort to sound out the prospects for a move to direct talks, Egyptian President Hosni Mubarak met with Abbas, Netanyahu and U.S. Mideast envoy George Mitchell separately Sunday in Cairo.

Egypt has friendly ties with both Israel and Abbas' Palestinian Authority, and Cairo — like Washington — is pushing to narrow the divide between the two sides and coax them back to the negotiating table.

None of the leaders — nor the U.S. envoy — spoke after the meetings, but Egypt's foreign minister, Ahmed Abul-Gheit, told reporters there is still work to be done to get the Palestinians to move to direct talks.

"There must be a strong Israeli strategic move that would deepen Palestinian trust in Israel's intentions, so we can move from indirect to direct talks," Abul-Gheit said. "Egypt thinks there is the need for direct talks, that they are the road to reach a settlement ... but to have these direct talks, the atmosphere must be ripe and enough progress made."

Cairo called for a more hands-on U.S. role with the two sides to lay the groundwork for direct negotiations. Abul-Gheit said this could include at least a general framework from Washington for the final settlement.

Egypt's top diplomat also said there is still more discussion and diplomacy in an effort to narrow the divide and build trust between the two sides.

"We are still hopeful that we can bridge that gap, the gap between the needs of security for Israel and the borders for the Palestinians," Abul-Gheit said. "You have to create the basis to proceed from indirect to direct talks. That is still lacking. We need to help the Americans and both parties to come closer to each other."

He said Mubarak received a message Sunday from President Barack Obama and a telephone call from U.S. Secretary of State Hillary Clinton urging a swift move to direct peace talks.

Abul-Gheit said he hoped that by September there would be enough progress to allow the Palestinians and Israel sit at the same negotiating table, if not sooner.

The four months set aside for Mitchell's shuttle diplomacy and Israel's partial curb on settlement construction will have come to an end by September.

Israeli defense officials have said that Israel is considering expanding the role of Palestinian security forces in West Bank towns and removing additional checkpoints that hinder the movement of people and goods. The officials spoke on condition of anonymity because no final decision had been made.

When asked about these steps and whether they constitute trust-building, Abul-Gheit said they "address certain problems."

"But I think we have to focus on (freezing) settlement activity, a timeframe and the 1967 lines," he said, referring to the borders prior to the 1967 Mideast war.

Abbas is unlikely to enter direct talks without explicit backing from Arab states, whose support he received before engaging in indirect negotiations. Arab foreign ministers are to discuss the fate of those talks later this month.

Netanyahu, who met earlier Sunday with Mitchell in Jerusalem, told Israel's Cabinet that he would discuss with Mubarak ways to resume direct talks with the Palestinians.

The two leaders' meeting in Cairo lasted nearly two hours.

Netanyahu will also meet late Sunday with EU foreign affairs chief Catherine Ashton upon his return to Jerusalem.

Earlier in the day, Ashton visited the blockaded Gaza Strip to gauge the impact of Israel's easing of its embargo on the Hamas-ruled territory.

She called on the Israel to go beyond easing its embargo and throw open Gaza's borders.

"We want to see the opportunity for people to be able to move around freely, to see goods not only coming in to Gaza but exports coming out of Gaza," Ashton said.

In Jerusalem, Ashton said she discussed the Gaza situation with Israeli Foreign Minister Avigdor Lieberman before meeting Netanyahu. She said the blockade must be lifted, while recognizing that "the security of Israel is extremely important and must be assured."

Israel continues to ban virtually all exports from Gaza and restricts the import of badly needed construction supplies and raw materials for industry. And along with Egypt, it prevents most Gazans from traveling.

Israel, citing security concerns, has signaled that it is not willing to completely open border crossings.

Meanwhile, Top EU diplomat Catherine Ashton concluded her Israel visit, demanding Israel lift its Gaza blockade and offering Europe's help to secure borders and rebuild the Strip.

European Union foreign policy chief Ashton demanded a total lift of Israel's blockade on Gaza and promised EU measures to improve living conditions in the Strip. She has now concluded a three-day visit to Israel and Palestinian territories that was largely focused on Gaza but did not include a meeting with the region's ruling Islamist group, Hamas.

During her second visit to Israel and the Gaza Strip in four months, Ashton demanded that Israel allow Gaza to export goods in order to boost its economy. She also indicated that the EU was prepared to help open up Gaza by helping monitor goods transported across the Strip's Israeli and Egyptian borders.

In the West Bank town of Ramallah, Ashton presented the Western-backed Palestinian Authority with nearly 5 million euros ($6.5 million), the first tranche of a 22 million euro EU grant to support private sector development in Gaza.

During her visit to Gaza City, Ashton visited two companies that are already receiving EU funds intended to rebuild Gaza's economy.

The EU envoy stressed that she was "very keen" to "provide for the better life for the ordinary people of Gaza - a better life than the one I saw today."

"People here recognize and understand the security needs of Israel," she said at a news conference held at a UN-run school for Palestinian refugees, adding, "that should not prevent the ability to be able to see the free flow of goods into and out of Gaza in order that houses can be rebuilt, children can go to fully functioning schools and businesses can flourish."

On her visit, Ashton met an unexpected ally, Israeli Foreign Minister Avigdor Lieberman. In a joint press conference with Ashton on Sunday, Lieberman, who is a member of the ultra-nationalist Israel Beiteinu party, declared his support for a two-state solution of sorts.

Lieberman announced his controversial plan, not yet approved by the Israeli cabinet, to lift the blockade on Gaza entirely, while at the same time cutting Gaza off from the Israeli state.

Lieberman said his plan would rely in part on European Union monitors at the Gaza crossing points.

Ashton took Lieberman's plan as a positive sign, stating that if the EU could "be of value, and the parties agree, we are ready to support a smooth handling of goods at the crossings based on the agreement on movement and access."

On Monday the EU's top diplomat met with the parents of captive Israeli soldier, Gilad Shalit, who has been detained in Palestinian hands since a deadly border raid in 2006.

"In all the statements that I have made, in all of my meetings, the issue of Gilad Shalit's release is part of what we are demanding," Ashton said after her meeting with the soldier's parents.

Hamas has offered Shalit's release in exchange for the release of hundreds of Palestinian prisoners - including top militants responsible for deadly attacks.

Shalit's father, Noam Shalit, told reporters he had requested that Ashton "demand progress in negotiations for Gilad's release before requesting humanitarian gestures in Gaza."

Ashton said she believed that lifting Israel's four-year blockade on the Strip would expedite Shalit's freedom.

Though Gaza constituted the main topic of discussion throughout Ashton's meetings with Israeli and Palestinian leaders in Jerusalem, Tel Aviv, the West Bank and Gaza, she refused to meet with Gaza's rulers, the Islamist group Hamas, which has been in power in the Strip since 2007.

"I did not meet Hamas. I do not meet Hamas," Ashton said of her decision not to see the organization that the EU has deemed a terrorist group.

Nevertheless, Ashton called for the resumption of direct talks between Israeli and Palestinian leaders and condemned Israeli construction in East Jerusalem, which the Palestinian Authority intends to make the capital city of its future state.

On the other hand, the Pentagon’s chief arms seller told Reuters in an interview that U.S. arms sales for fiscal 2010 are likely to approach their target, which is slightly down from the sales level of fiscal 2009.

Sales are expected to be close to $37.8 billion this fiscal year, down from $38.1 billion last fiscal year.

Defense Security Cooperation Agency Director Jeffrey Wieringa had predicted in October that arms sales could reach $50 billion, exceeding the agency's official forecast, but that figure is more likely to be hit next year, he said on Monday.

He also said a deal was near on the sale of fighter jets to Israel, specifically the first foreign military sale of the Lockheed Martin F-35 Joint Strike Fighter outside of the eight partner nations.

"The ball is in their court," Wieringa said. "I am waiting for them to make a decision any day."