WASHINGTON – Secretary of State Colin Powell said Monday that an agreement to end Israel's siege at Bethlehem's Church of the Nativity is likely soon.
"I think there is a solution," Powell said at a news conference, providing no further details.
While difficult discussions remain, Powell said all the elements of an accord are in place.
A breakthrough on Bethlehem, following the one Sunday that freed Yasser Arafat from confinement in Ramallah, would give U.S. diplomacy in the Middle East its biggest boost in months.
U.S. and Israeli officials said privately it probably would be based on Israel's proposal to offer the terror suspects holed up in the Church of the Nativity a choice of exile or trial in Israel.
"I think it will be resolved in the near future," Powell said.
The other agreement, on Ramallah, should be completed within 48 hours, he said, with terror suspects at Arafat's headquarters to be placed under joint U.S.-British supervision.
German Foreign Minister Joschka Fischer, who met with Powell, renewed his government's support for the Bush administration's attempt to end the violence and move toward peacemaking.
Fischer pointed out that Germany has a large Muslim minority, which enhances the country's interest in a settlement of the Arab-Israeli conflict.
But in evaluating the situation earlier Monday, President Bush's spokesman, Ari Fleischer, cautioned that "nothing in the Middle East is easy."
The liberation of Arafat ends the Palestinian leader's confinement in Ramallah since December and in his battered headquarters in the West Bank city for a month.
"He's free to go whenever and wherever he wants to go," State Department spokesman Richard Boucher said.
At the same time, Boucher urged U.N. officials to consider Israel's complaints about the composition of a fact-finding delegation to a Palestinian refugee camp in Jenin. "The United Nations should work with the parties involved, the Israelis and Palestinians, to try to coordinate on this mission," Boucher said.
"We look forward to a thorough and impartial assessment from this team to the secretary-general [Kofi Annan] of the recent events in Jenin," the U.S. official said.
Israel, fearing a smear campaign, has sought to revise composition of the delegation. It has denied allegations that Israeli forces massacred scores of civilians while hunting down terror suspects and blocked the inspection.
Secretary of State Colin Powell has tried to broker a compromise. He told the Senate last week that Assistant Secretary of State William Burns had found no sign of a massacre during a 3 1/2-hour inspection of the camp.
White House spokesman Ari Fleischer said President Bush was pleased with steps taken to end the crisis in Ramallah.
"The president is pleased with the action over the weekend and pleased with the initial follow-through, but it's going to have to be closely monitored," Fleischer said.
"Nothing in the Middle East is easy. Nothing stays as hopeful as you'd like it to be for long," he said.
The wanted men at Arafat's headquarters will be placed under American and British monitoring "in very short order," Fleischer said.
National security adviser Condoleezza Rice said the weekend agreement was "one way to help move this process forward." But she said both sides need to do far more to end the violence.
Addressing a foreign policy forum, Rice praised the land-for-peace plan being pushed by Saudi Arabia, even though she said that "every element of it may not be workable" and that many of the details would be subject to negotiation.
She said the fact that Saudi Crown Prince Abdullah was pushing the plan, offering recognition of Israel in exchange for the lands the Arabs lost in the 1967 Mideast war, showed that Saudi Arabia was willing to become "engaged, as Jordan and Egypt have, in bringing peace to the region as a whole."
The deal crystallizing over Bethlehem would give the gunmen sought by Israel a choice of exile or prosecution by Israel, according to a well-placed Israeli diplomat. Two U.S. officials also told The Associated Press on condition of anonymity that a breakthrough may be imminent. They declined to provide details.
Israel would withdraw its troops from the biblical city, as it will from Ramallah, although there is little doubt they would return if terror strikes Israel again.
On this tactic, the Bush administration remained at odds with Israel.
Boucher renewed a three-week-old U.S. demand for a total pullback. And, he said, Israel should refrain from further incursions.
Arafat's imminent release from confinement prompted Bush to call on him again to end anti-Israel violence. The president also invited other leaders in the region "to bare their soul" with ideas for permanently resolving the crisis.
Bush will meet with Israeli Prime Minister Ariel Sharon at the White House in the next two weeks. The meeting, their fifth, is part of what the president cast Sunday as an open invitation to Mideast leaders to consult on the next steps in peacemaking.
The Associated Press contributed to this report.