Over the next six months Israeli and PA negotiators are expected to finalize an agreement that will include dividing Jerusalem, flooding Israel with Palestinian immigrants and an Israeli withdrawal to the 1948 Armistice Line.

According to a report issued by the Jerusalem Center for Public Affairs, Prime Minister Olmert has indicated Israel's willingness to be "flexible" in meeting Arab demands, and US President George W. Bush will pressure PA Chairman Mahmoud Abbas to do the same during meetings next month. Israel will reportedly withdraw most military and civilians to the 1967 border, with the exception of large settlement blocks near pre-1967 Israel.

Israel is also expected to meet Arab demands to "make up" territories in Judea and Samaria that remain under Israeli control by transferring lands from pre-1967 Israel to PA control. But the PA has refused to accept Arab-populated regions of pre-1967 Israel as part of the deal.