Israeli leaders are seriously considering a dormant Saudi plan offering a comprehensive peace between Israel and the Arab world in exchange for lands captured during the 1967 war, Defense Minister Ehud Barak said Sunday.

Barak said it may be time to pursue an overall peace deal for the region since individual negotiations with Syria and the Palestinians have made little progress.

Barak said he has discussed the Saudi plan with Prime Minister-designate Tzipi Livni, who is in the process of forming a new Israeli government, and that Israel is considering a response.

Saudi Arabia first proposed the peace initiative in 2002, offering pan-Arab recognition of Israel in exchange for Israel's withdrawal from Arab lands captured in 1967 — the West Bank, Gaza Strip, east Jerusalem and the Golan Heights.

The 22-member Arab League endorsed the plan last year.

Israel has said the plan is a good basis for discussion, but expressed some reservations.

"There is definitely room to introduce a comprehensive Israeli plan to counter the Saudi plan that would be the basis for a discussion on overall regional peace," Barak told Israel's Army Radio.

He noted the "deep, joint interest" with moderate Arab leaders in containing Iran's nuclear ambitions and limiting the influence of the radical Islamic Hezbollah movement in Lebanon and Hamas in Gaza.

Analyst Ghassan Khatib, a former minister in the Palestinian Cabinet, said interest in the plan was "a little bit late" but welcome.

"I strongly believe that the Arab initiative is the best approach to peace between the Arabs and the Israelis," he said. "It fulfills all the legitimate objectives of Israel and those of the Palestinians and at the same time it has this regional dimension and it reflects one of the rare issues on which Arabs have consensus."

While Israel's outgoing prime minister, Ehud Olmert, has welcomed the Saudi plan, he and other leaders want to keep small parts of the territories captured in 1967. Israel also objects to language that appears to endorse a large-scale return of Palestinian refugees to lands inside Israel. Israel says a massive influx of Palestinians would destroy the country's Jewish character.

Yuval Steinitz, an Israeli lawmaker from the conservative opposition Likud Party and a member of parliament's Foreign Affairs and Defense Committee, said that for Israel the Saudi plan is a nonstarter and called Barak's remarks "an empty political gesture."

"It doesn't recognize Israel's right to defensible borders...(and) demands Palestinian refugees settle in the Jewish state as well as the Palestinian state, which is totally unacceptable," he said.

Israel's ceremonial president, Shimon Peres, proposed putting Israel's various peace talks on one track last month at the United Nations, calling on Saudi King Abdullah to "further his initiative." He has since been pushing the idea in meetings with Israeli, Arab and Western officials, his office said.

While Peres has no formal role in Israeli foreign policy, he is a Nobel peace laureate and well respected in the international community.

In Sunday's interview, Barak said he was in full agreement with Peres.

"I had the impression that there is indeed an openness to explore any path, including this one," he said of his talks with Livni.

Barak, who leads the Labor Party, is expected to play a senior role in the next administration.

Livni's office refused to comment on her talks with Barak.

Palestinian negotiator Saeb Erekat noted that pursuing the Saudi peace initiative did not necessarily undermine the direct talks between Israel and the Palestinians and he encouraged Israel to pursue this track.

"I think Israel should have done this since 2002. It is the most strategic initiative that came from the Arab world since 1948," he said. "I urge them to revisit this initiative and to go with it because it will shorten the way to peace."

ARON HELLER

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Hamas could halt talks on Israeli soldier: official

Hamas could halt talks on the release of an Israeli soldier seized in a cross-border raid and now being held in the Gaza Strip if Egypt does not free one of its leaders, a Hamas official said.

Soldier Gilad Shalit was abducted by militants from an Israeli army base in June 2006.

In exchange for his release, Hamas has demanded that Israel sets free hundreds of prisoners it holds.

It also wants Egypt to release Ayman Nofal, a senior Hamas military operative arrested in Egypt on suspicion he was planning to attack targets there.

Egypt has been trying to mediate a prisoner swap.

But Hamas leader Youssef Farhat told a rally of hundreds of Nofal's fellow militants that Egypt could not play a mediation role as long as it held him.

"We have put the file of Shalit in the fridge and it will remain frozen unless Ayman Nofal is freed," Farhat said.

Hamas spokesman Sami Abu Zuhri said the comments reflected frustration within Hamas over the situation.

"Nofal's continued detention is annoying and it has topped the agenda of all talks with Egyptian officials. We hope Egypt can end it by freeing him," Abu Zuhri said.

Hamas won a parliamentary election two years ago, prompting Israel to impose an economic blockade on the Gaza Strip.

It blew up the Rafah border crossing in January, allowing hundreds of thousands of Gazans to pour into Egypt to stock up on supplies. Egypt resealed the border and has stepped up patrols to prevent another breach.

Nidal al-Mughrabi

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