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Israel considers offering land to Palestinians in exchange for settlements

Prime Minister Ehud Olmert is reviewing a proposal whereby Israel would cede territory to the Palestinians under a final peace accord in order to hold on to major West Bank settlements, the Haaretz newspaper said Tuesday.

The Israeli land would be meant to compensate for the rougly 5 percent of the West Bank occupied by the settlement blocs, the newspaper said. The architect of the plan is Israeli President Shimon Peres, who won a Nobel Peace Prize for his role in the 1993 interim peace deal between Israel and the Palestinians, Haaretz said.

A spokesman for Peres did not deny the existence of a land swap proposal, and said Haaretz incorrectly reported that the president has proposed giving up land where Israeli Arab communities stand.

Haaretz said Olmert has not rejected the proposal's main concepts, but the prime minister's office issued a statement expressing "amazement at this erroneous article."

"Such a plan has not been considered, nor is it being raised for discussion in any forum," the statement said.

Peace negotiations between Israel and the Palestinians broke down in early 2001 following the launch of the Palestinian uprising against Israel. Multiple contacts between Olmert and Palestinian President Mahmoud Abbas in recent months have not progressed beyond goodwill gestures to substantive talks.

Israel agrees to the formation of a Palestinian state in the West Bank and Gaza Strip, but the two sides are deeply divided over what the borders of that state should be. Israel wants to annex the West Bank settlement blocs while Palestinians want Israel to withdraw from 100 percent of the territory, captured along with the Gaza Strip and east Jerusalem in the 1967 Mideast war.

Israel evacuated all of Gaza in 2005. Jerusalem remains one of the most hotly disputed issues in the Israeli-Palestinian conflict, with Israel claiming the entire city for its capital and the Palestinians claiming the eastern sector as capital of their future state.

A spokesman for Peres, Yoram Dori, did not deny that a land trade proposal has been submitted to Olmert.

"I don't know of a plan that has all of the details that are given in the article," Dori replied when asked to comment on the Haaretz report.

At the same time, he said there has been no proposal to give up Israeli Arab communities.

"The idea of exchanging territory is not new," Dori added, noting that former Prime Minister Ehud Barak made such a proposal in peace talks in 2000.

Israeli Arabs, who account for 20 percent of Israel's population, have routinely decried as racist any land swap proposals that would include their communities.

"This is an obscene, immoral idea," said Israeli Arab lawmaker Ahmed Tibi. "It's unacceptable to compare colonialist settlers that took over land and indigenous Israeli Arabs in any way."

The most prominent Israeli proponent of a land swap is Strategic Affairs Minister Avigdor Lieberman of the hawkish Yisrael Beiteinu Party, who wants to transfer Israeli Arab towns to Palestinian jurisdiction, strip their residents of Israeli citizenship, and annex large Jewish settlements in the West Bank to Israel.

Haaretz said Peres' idea is meant in part to keep Lieberman in Olmert's governing coalition.