Israel dampens expectations for summit of Israeli, Arab leaders in Egypt

Israel downplayed expectations ahead of Monday's summit bringing together Israeli and Arab leaders, saying the meeting - designed to boost Palestinian President Mahmoud Abbas in his struggle against Hamas - was not the time to start negotiations on a final peace deal.

Despite Israel's goodwill gesture Sunday to release desperately needed funds it has withheld from the Palestinian government, Israeli Prime Minister Ehud Olmert cautioned there would be no "dramatic breakthrough" Monday, rejecting Palestinian calls to start talks on a peace treaty.

Egyptian President Hosni Mubarak has invited Abbas, Olmert and Jordan's King Abdullah II to Sharm el-Sheik in a show of support for the Palestinian president in his struggle with Hamas. The meeting, expected to get under way Monday afternoon, is also meant to showcase that Abbas of Fatah can move ahead with peacemaking.

But an aide to Olmert threw cold water on beginning talks on a final Israeli-Palestinian peace deal, despite urging from Abbas and Arab countries to take immediate advantage of the Hamas militants' expulsion from the coalition government.

Israel "is not ready yet to go into final status negotiations," Olmert aide David Baker said.

Speaking in Gaza, deposed Palestinian Prime Minister Ismail of Hamas, denounced summit hopes as "illusions" and a "mirage." He said, "the Americans won't give anything. Israel won't give us anything. Our land, our nation will not come back to us except with steadfastness and resistance."

Earlier Sunday, Olmert's Cabinet approved the release of tax funds that Israel collects on behalf of the Palestinians but has withheld since Hamas swept Palestinian parliamentary elections in January 2006. Israel is holding $550 million (euro410 million) in frozen funds, but the Cabinet decision did not say how much of the money would be released, or when.

The Israeli freeze on the money rendered past Palestinian governments unable to pay full salaries to government employees, causing hardship in the already impoverished territories.

In Jordan, where he met with Abdullah before the talks, Abbas was more optimistic about the summit, saying he received U.S. and Israeli assurances that the Jewish state was ready to make progress at the meeting in Egypt.

Egypt's Foreign Minister Ahmed Aboul Gheit also was more hopeful that progress would be made Monday, telling reporters the purpose of the meeting was to begin rebuilding confidence between the Israelis and Palestinians "until the road is open to restart negotiations between the two sides".

Peace efforts no doubt will be complicated by the emergence of a two-headed Palestine, ruled by the Iranian-backed Hamas in Gaza and the Western-backed Fatah in the West Bank.

Egypt and Jordan have thrown their support behind Abbas, fearing Hamas' Gaza takeover could spread turmoil.

The Sharm el-Sheik summit comes a day ahead of a gathering in Jerusalem of the Quartet of Mideast negotiators - the U.S., EU, U.N. and Russia. The hope is that the meeting in Egypt could lead to more in-depth international efforts to prod peace talks that broke down amid violence in 2001.

On Tuesday, Mubarak is to meet with Saudi King Abdullah in Sharm el-Sheik, seeking to unify an Arab front behind Abbas.

Mubarak is afraid a Hamas-ruled Gaza on his country's border could embolden Egypt's own banned Islamic opposition, the Muslim Brotherhood, and spawn terror attacks. Abdullah is afraid the Fatah-Hamas conflict could spread to the West Bank and spill over to neighboring Jordan, where about half the population is Palestinian.

And both, along with Saudi Arabia, are afraid Gaza could become a forward position for their regional foe, Iran.