JERUSALEM -- U.S. Secretary of State Hillary Rodham Clinton on Wednesday said Israeli and Palestinian leaders are "getting down to business" on core issues of renewed peace talks, but gave no sign they are any closer to resolving a looming crisis over Israeli West Bank settlements.
The Palestinians are threatening to walk out of the talks if Israel resumes construction in the settlements after a slowdown expires at the end of the month. Israeli Prime Minister Benjamin Netanyahu said earlier this week that at least some construction will resume.
Clinton was in Jerusalem for a second day of talks aimed at ending the impasse, a day after meeting Netanyahu and Palestinian President Mahmoud Abbas at a summit hosted by Egypt.
"They are getting down to business and they have begun to grapple with the core issues that can only be resolved through face-to-face negotiations," Clinton told reporters. "I believe they are serious about reaching an agreement that results in two states living side by side in peace and security."
She made no mention of the settlement dispute, but acknowledged that many obstacles remain and many Israelis remain skeptical after years of failed peace initiatives by a string of U.S. presidents, including her husband.
"We are convinced that the legitimate aspirations of these two peoples are not incompatible," Clinton said. "We are also convinced that peace is both necessary and possible and that this is a moment of opportunity that must be seized."
President Barack Obama has made his pursuit of a Mideast settlement a centerpiece of his foreign policy. After months of U.S. shuttle diplomacy, he summoned the Israeli and Palestinian leaders to Washington early this month to formally launch the first direct negotiations since talks collapsed in 2008 following Israel's military offensive in Gaza. Obama hopes to forge a deal within a year.
Negotiators will have to tackle a series of issues that have torpedoed talks in the past: borders between Israel and a future Palestinian state, the fate of millions of Palestinian refugees and the competing claims to the holy city of Jerusalem.
But they will have a hard time addressing those disputes if they cannot resolve the settlement disagreement.
Netanyahu imposed a slowdown on settlement construction last November, seeking to draw the Palestinians back to the negotiating table. The slowdown is set to expire on Sept. 26, and Netanyahu faces heavy domestic pressure to resume construction.
The Palestinians oppose all settlements, because they are built on captured territory the Palestinians claim for their future state.
Netanyahu has signaled he is looking for a compromise, suggesting this week that while he cannot continue the current slowdown he will greatly restrict building activity.