The UN's top Middle East envoy said there are "signs of hope" that Israel and the Palestinians can agree to revive the stalled peace process in time for a related US-sponsored international conference in November.

Michael Williams, the UN special coordinator for the Middle East peace process, on Wednesday said the conference, the revival of a pan-Arab peace initiative, and, perhaps above all, the dialogue between Israeli Prime Minister Ehud Olmert and Palestinian President Mahmoud Abbas are among the encouraging signals.

The talks between Abbas and Olmert, most recently on Tuesday, and the reform efforts of Palestinian Prime Minister Salam Fayyad "have created growing expectations," Williams told the UN Security Council.

"We cannot afford a new failure in the efforts to revive the Arab-Israeli peace process," he said. "There is a hope now which has been absent for almost seven years. A setback at this stage could have serious consequences."

The Israeli and Palestinian leaders on Tuesday tackled core issues that have tormented Mideast peacemakers for decades: what the final borders of a Palestinian state would be; whether Palestinian refugees from the 1948 war that accompanied Israel's creation would be allowed to return to their original homes in Israel along with their descendants; and whether the holy city of Jerusalem could be shared.

It was the first time Olmert and Abbas addressed the issues in depth and represented a key building block for the planned November conference. Williams said the Abbas-Olmert meetings are expected to continue, with the next meeting slated for September 10, ahead of a visit by Secretary of State Condoleezza Rice.

Riyad Mansour, the Palestinian UN observer, told the council "there is at this time a significant opportunity before us to end the Israeli occupation and towards the attainment of the two-state solution."

(China Daily via agencies August 31, 2007)