Washington's top diplomat wrapped up a lightning visit to Israel on Tuesday but was expected to return within 24 hours as speculation grew that a jailed US-Israeli spy could be key to extending peace talks.

After flying in from Paris on Monday evening, US Secretary of State John Kerry met for two hours with Israeli Prime Minister Benjamin Netanyahu before entering talks with Palestinian negotiators at his Jerusalem hotel.

Early on Tuesday, he met a second time with Netanyahu for two hours, with sources close to the talks saying they discussed a deal to free Israeli spy Jonathan Pollard as a way of breaking the logjam in the negotiations.

US peace efforts are teetering on the brink of collapse after Israel refused to free a fourth and final group of 26 veteran Palestinian prisoners, which would have completed an agreement that brought the sides back to the negotiating table in July 2013.

Furious Palestinian officials have warned that unless Israel changes its stance on the prisoner releases, it could signal the end of the negotiations, which are in any case due to draw to a close on April 29.

US efforts are currently focused on getting the parties to agree on an extension to the end of the year.

Release proposal

Separate sources close to the negotiating teams confirmed that Washington is considering a proposal to release Pollard as a way to break the deadlock.

Pollard was arrested in Washington in 1985 and sentenced to life imprisonment for spying on the United States on behalf of Israel.

"The emerging deal ... contains the following elements: the release of Jonathan Pollard before the Passover holiday (starting on April 14) and the extension of the negotiations with the Palestinians into 2015," one source told AFP.

He said the fourth group of prisoners would be freed - "including Israeli Arabs" - and Israel would also agree to free another 400 prisoners not involved in deadly anti-Israeli attacks.

The proposal would include a limited freeze on settlement construction, with Israel adopting "a policy of restraint with (West Bank) government tenders".

"The settlement freeze does not include East Jerusalem, private construction or building of public institutions," a source told Reuters, speaking on condition of anonymity.

Israeli settlements in the West Bank and East Jerusalem, land captured in the 1967 war and which Palestinians seek for their state, have been a major stumbling block in the talks, which began in July. Most countries view the Israeli settlements as illegal.

Palestinian ultimatum

On Monday, the Palestinians gave Kerry 24 hours to come up with a solution to the prisoner row, warning that a failure to do so would see them turning to UN bodies to press their claims for statehood.

A Palestinian source said there had been no new developments from Kerry's meeting with chief negotiator Saeb Erakat on Monday.

"The meeting did not produce any results because of Israel's insistence on a Palestinian agreement to extend negotiations until the end of the year in exchange for the fourth contingent of prisoners," he said.

"We completely reject any link between Pollard and the release of our prisoners or with the extension of negotiations. As for extending these talks, we must be clear that the release of prisoners is completely unlinked to the negotiations," Jami Shehada said.

Palestinian negotiators said they will only agree to extend the talks if Israel frees another 1,000 prisoners, including political heavyweights, the sick, and women and children.

They have also demanded a general freeze on all settlement construction, including in East Jerusalem.

AFP-Reuters

(China Daily 04/02/2014 page11)