Rice says peace talks go on despite Olmert quitting

WASHINGTON (CNN) -- Secretary of State Condoleezza Rice said the resignation of Israeli Prime Minister Ehud Olmert will not affect efforts to reach a Mideast peace deal before the end of the year.

"This is an internal Israeli matter," Rice told reporters after a 2˝-hour meeting with Israeli Foreign Minister Tzipi Livni and lead Palestinian negotiator Ahmed Qorei, which she called "very fruitful."

"The goal remains the same," she said. "We continue to watch parties and to work with parties who are working very, very hard toward an agreement. The issues are difficult and they've always been difficult."

Livni left the State Department without talking to reporters, hours after Olmert announced he will not seek his party's nomination in September's primary elections.

Palestinian negotiator Saeb Erekat said after the talks that the parties agreed to continue trying to reach an agreement before the end of the year.

"We will not opt for an option of partial agreements, shortcuts, or anything short of a full agreement on all issues, and let everybody understand that we are negotiating the issues of Jerusalem, borders, settlements, refugees, security and prisoners, and water," he told reporters. "We want to achieve an agreement on all issues or no agreement."

Rice said she will travel to the region in August and Erekat said the three parties could meet again in New York during the U.N. General Assembly in September.

State Department spokesman Sean McCormack said Wednesday that Rice will "test the tolerances" of the process and "will continue to push" but he sought to lower expectations that a deal will be reached, suggesting she will try to hand over the peace process in good working order to the next U.S. president.

"We're not going to try to push the limits of a process to the point where it breaks and you lose hope of a solution, because it is too important a moment in the Middle East to lose this opportunity," McCormack said. "The Annapolis process has hope of allowing the parties to get to a final negotiated solution to all the differences that are between them. Whether that comes in '08 or '09 or some other time, we will see."

Erekat echoed that sentiment, saying, "We will not allow time to be the sword over our necks."

"Camp David failure is not an option for us and the Israelis and the Americans. Blame game is not an option for us," he said, referring to efforts by the Clinton administration to force a peace deal before leaving office. The collapse of the talks in the summer of 2000 led in part to the second Palestinian intifada and years of renewed violence between the two sides.

Olmert and Palestinian President Mahmoud Abbas pledged at the Annapolis peace conference in November to work toward a peace deal before President Bush leaves office.

The two sides have been holding negotiations, with Rice meeting with them periodically.

Earlier this week, Olmert said he does not believe a peace accord with the Palestinians can be reached by the end of the year.

Speaking Monday to parliament's Foreign Affairs and Defense Committee, Olmert said the status of Jerusalem is the main obstacle to reaching an agreement, according to a senior Israeli official who attended the committee meeting.

Palestinian legislator Mustafa Barghouthi said during a visit last week to Washington that reaching a deal before Bush leaves office will be extremely difficult, given the weak political positions of Olmert, Abbas and Bush.

Olmert's announcement Wednesday raised more questions about the future of the peace process, but Erekat said he was told by Livni and Olmert that Israel would "stay the course and continue working in the negotiations."

"They told us that this will not affect the negotiations," he said. "Now, we have to wait and see. It's an internal Israeli matter as far as we're concerned, but at the end of the day, as Palestinians, we want to make peace with all Israelis, not with this party or that person. We're pursuing peace to make peace with all Israelis and this is none of our business and we are there. They told us today that they want to continue the negotiations."

On Tuesday, Rice met with Israeli Defense Minister Ehud Barak. She pressed him about the expansion of Israeli settlements in the West Bank and Israel's need to meet obligations under the U.S.-backed "road map" for peace between the two sides.

Israel has bucked international calls to stop expanding Jewish settlements in the West Bank. Palestinian officials say any new construction by Israel in the West Bank is an obstacle to the peace process.

Barak said after the meeting that Israel is continuing to try "to improve the daily lives of the Palestinians."

All About Israel • Ehud Olmert • Palestinian Politics • Condoleezza Rice