Israel agrees to free Palestinian prisoners

Israel on Saturday announced it will release some Palestinian prisoners as a "gesture", as the two sides agreed to meet to pave the way for their first direct talks in three years.

The announcement came hours after US Secretary of State John Kerry told reporters in Amman late on Friday that Israeli and Palestinian negotiators had laid the groundwork to resume the frozen peace talks.

Kerry said that as a first step Palestinian negotiator Saeb Erakat and his Israeli counterpart Tzipi Livni would meet him in Washington "to begin initial talks within the next week or so".

The last round of direct talks broke down in 2010 over the issue of Israeli settlements in the West Bank and east Jerusalem. The issue of continued expansion of Jewish settlements remains one of the biggest stumbling blocks between the two sides.

On Saturday, Israeli Intelligence Minister Yuval Steinitz said his government would engage in the staged release of a "limited number" of prisoners, some of whom have been in Israeli jails for 30 years.

Steinitz provided no other details but said "there will definitely be a certain gesture here".

Kerry's announcement came after he spent four days consulting the Israeli and Palestinian leadership from his base in an Amman hotel and a late Friday helicopter dash to the Palestinian Authority in Ramallah.

Just minutes before boarding a plane to fly home, Kerry told reporters both sides had reached "an agreement that establishes a basis for resuming direct final status negotiations".

"This is a significant and welcome step forward," he added, having doggedly pushed the two sides to agree to resume talks in six intense trips to the region since becoming the top US diplomat in February.

But he warned that the issues separating the sides were "difficult" and "complicated".

A US State Department official said Kerry had wrenched a commitment from both sides "on the core elements that will allow direct talks to begin".

The Israelis and Palestinians remain far apart on final status issues including the borders of a future Palestinian state, the right of return of Palestinian refugees, and the fate of Jerusalem which both want as their capital.

Palestinian president Mahmud Abbas has also repeatedly called for a freeze to Israeli settlement building and a release of prisoners.

Analysts cautioned against reading too much into the latest developments.

Chico Menashe, diplomatic commentator for Israeli public radio, likened the situation to "a half-baked cake Kerry removed from the stove. Kerry convinced the Israelis and Palestinians it was edible, and both sides agreed to eat it."

Gal Berger, Palestinian affairs correspondent for Israel's public radio pointed to the fact that Yitzhak Molcho, the personal envoy of Prime Minister Benjamin Netanyahu, has already been holding talks with Erakat, which were still ongoing.

"Now Livni is being added, but it is still not a meeting at the level of the leaders (Netanyahu and Abbas)," he said.

Predictably, the Islamist Hamas movement which runs the Gaza Strip rejected a return to talks, its spokesman Sami Abu Zuhri saying Abbas had no legitimate right to negotiate on behalf of the Palestinian people.

He told AFP the movement "considers the Palestinian Authority's return to negotiations with the occupation to be at odds with the national consensus".

EU foreign affairs chief Catherine Ashton warmly welcomed the agreement, adding her "great hope that we may finally see progress towards the objectives which they share along with their friends and allies around the world."

UN chief Ban Ki-moon called on both side sides to "show courage and responsibility" to ensure that once the talks resume that they can be sustained.