With the Annapolis summit less than a week away, there is still no agreement on a joint declaration by Israel and the PA. Negotiating teams for the two sides, headed by Foreign Minister Tzipi Livni and PA negotiator Ahmed Qureia (Abu Ala) met for hours in an attempt to fashion a mutually acceptable statement.

PA Chairman Mahmoud Abbas said that the two sides were close to drafting a joint statement but, that last-minute difficulties were "not unexpected."

The Israeli cabinet for diplomatic and security matters devoted a session to the subject for the first time Wednesday. The heads of Israel's security bodies told the ministers that the PA has still not been successful in taking control over the terror organizations in Judea and Samaria.

Livni 'looked troubled'

SHABAK (General Security Service) chief Yuval Diskin told the cabinet that Abbas was "weak" and would have a hard time implementing an agreement. He also warned, however, that if Israel did not act and just waited for a new partner, it would find itself with no partner at all. Officials at the meeting said that Foreign Minister Tzipi Livni looked "troubled," IDF Radio reported. Livni and Defense Minister Ehud Barak will both be joining Prime Minister Olmert in Annapolis.

Some ministers were worried that, should the two sides be unable to resolve their differences, the summit will end with the U.S. forcing a joint statement to be made, to Israel's detriment.

Defense Minister Barak and Vice Premier Chaim Ramon clashed at the meeting after Barak warn

"We have already paid a price for this process and we must stop it," Netanyahu declared.

ed that Israel might be blamed for failure at Annapolis for not having made enough concessions. "Some people in Israel, and even some in the government, are raising Palestinian expectations and thus helping them accuse Israel of not budging from its position," Israel Radio quoted Barak as saying.

In response, Ramon said that if Israel offers the PA "half of what we offered at Camp David [in 2000, when Barak was prime minister], but in a calculated and responsible way," an agreement on the core issues will be possible even before the summit. Ramon is advocating a generous approach to the Arab side while Barak has been advocating greater caution.

'There is a chance we may reach an agreement'

Prime Minister Ehud Olmert is due to fly to the United States Saturday night, and is expected to meet with U.S. President George W. Bush twice before the summit begins and one more time after it begins. During the conference, Bush, Olmert and Abbas will hold a three-way meeting before the negotiating teams begin their discussions.

"The negotiations will not be simple," Olmert said Tuesday. "[Do you think that] after 60 years we will sit down and solve all of the problems in two weeks? There will be harsh disagreements, but I am optimistic. If we are careful and responsible, there is a chance we will reach an agreement in the end," he said.

The cabinet decided Tuesday to release 432 Arab terrorists incarcerated in Israeli jails, including some who planned to murder Jews but failed in executing their plans. The decision was reached despite the objection of IDF Chief of Staff Gabi Ashkenazi, who said it was wrong to release PA prisoners as long as Cpl. Gilad Shalit is being held captive by Hamas.

Lieberman said there are two possible outcomes to Annapolis: a complete Israeli surrender or an impasse.

Egypt will be sending its foreign minister, Ahmed Aboul-Gheit, to the conference. It is still not known for certain whether Syrian and Saudi representatives will be coming to the summit.

U.S. Secretary of State Condoleezza Rice said Wednesday that the U.S. will make efforts to bring about a permanent status agreement between Israel and the Arabs of Judea and Samaria in the course of 2008.

Netanyahu, Lieberman pessimistic

Meanwhile, opposition leader Binyamin Netanyahu attacked the government for what he called "a virtual peace process."

"There is no real partner for peace. The Palestinians have a very weak government," he told IDF Radio. The unilateral concessions being made by Israel "do not strengthen security but according to every security official opposed to these moves, they endanger the security of Israel's citizens and soldiers. We have already paid a price for this process and we must stop it," Netanyahu declared.

Minister for Strategic Matters Avigdor Lieberman told IBA Radio Wednesday that there were two possible outcomes to Annapolis: the first – a complete Israeli surrender to the PA's demands, and the second – an impasse in the negotiations. He repeated that Israel must demand the PA's acceptance of Israel as a Jewish state as a precondition for further negotiations.