Israel sees deal soon with Obama over settlements

By Adam Entous

JERUSALEM (Reuters) - Prime Minister Benjamin Netanyahu is negotiating a deal with Washington under which Israeli building in existing Jewish settlements could go forward in certain cases, Israeli and Western officials said on Tuesday.

In talks with U.S. President Barack Obama's Middle East envoy, Netanyahu has asserted that his government does not have the legal authority to stop building in cases in which tenders for new structures have already been awarded or when homes under construction have already been purchased.

"I'm confident that we will be able to reach an agreement in the near future that will enable us to put the settlement issue aside and to move forward to what I regard as far more substantive issues in the peace process," Michael Oren, Israel's newly appointed ambassador to Washington, told Reuters.

Under pressure from Obama, Netanyahu this week publicly accepted for the first time the internationally backed goal of Palestinian statehood, but set a series of pre-conditions that were rejected by the Palestinians.

Netanyahu has refused to accept Obama's direct call for a full settlement freeze in the Israeli-occupied West Bank, defending building in existing blocs to accommodate growing Jewish settler families, known as "natural growth."

Palestinian President Mahmoud Abbas has demanded a halt to all building, including natural growth, as a condition for resuming stalled peace negotiations with Israel.

"It's not about tenders. It's not about technicalities. Any kind of settlement activity undermines the two-state solution," said senior Palestinian negotiator Saeb Erekat. "I don't think the Americans will buy this."

"CREATIVE" PROPOSALS