updated 9/14/2010 3:50:50 PM ET 2010-09-14T19:50:50

Under pressure to compromise, Israeli and Palestinian leaders on Tuesday dug into the central issues blocking a peace deal but the latest talks produced no visible progress on the divisive issue of Jewish settlements.

Israeli Prime Minister Benjamin Netanyahu and Palestinian President Mahmoud Abbas held an extra, unscheduled session with U.S. Secretary of State Hillary Rodham Clinton, but there was no word on signs of a breakthrough. After the leaders' first meeting at this Red Sea resort, U.S. peace envoy George Mitchell offered reporters a mildly positive assessment.

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Mitchell said the core issues in the peace process were discussed, but all sides agreed not to reveal which ones or with what results.

"I'm not going to attempt to identify each one that was discussed, but several were in a very serious, detailed and extensive discussion," Mitchell said at a news conference.

Israeli officials said Sharm el-Sheikh was chosen for Tuesday's meeting in recognition of Egypt's key role in regional peace efforts. "We were guests of the Egyptian President Mubarak," said Mark Regev, Netanyahu's spokesman. "Egypt plays an important role in supporting this process."

The leaders move on to the holy city of Jerusalem for more discussions Wednesday in another symbolic gesture aimed at underscoring the importance of the negotiations, the first direct talks between the Israelis and Palestinians in almost two years.

The status of Jerusalem is one of the thorniest issues dividing the two sides. Israel claims the undivided city as its capital, while the Palestinians want the eastern part to be the capital of an eventual state.

Clinton did not comment, but told reporters on the flight to Egypt from Washington on Monday that "the time is ripe" for an agreement based on the notion of a sovereign Palestinian state and a secure Israel.

Mitchell was pressed to say whether there was progress on settlements. "We continue our efforts to make progress and we believe that we are moving in the right direction, overall," he said.

He repeated Clinton's call for Israel to extend its soon-to-expire curb on settlement construction in the West Bank. "We know this is a politically sensitive issue in Israel. But we've also called on President Abbas to take steps that help encourage and facilitate this process," he said.

Mitchell plans to travel to Syria and Lebanon later in the week to consult on the peace process. The Obama administration's goal is a comprehensive Mideast settlement that includes Israeli peace deals with Lebanon and Syria in addition to the Palestinians.

Palestinian spokesman Nabil Abu Rdeneh described the negotiations as "serious and deep, but the obstacle of settlements still exists."

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The ultimate aim is a deal that creates a sovereign Palestinian state beside a secure Israel.

Regev, Netanyahu's spokesman, said much work lay ahead and that the Palestinian and Israeli leaders have to make hard decisions. "The way to an agreement is to look at all the core issues together, not to run away from any one of them," he said.

The Palestinians want Israel's settlement curb extended beyond the current Sept. 26 deadline and have said failure to do so will bring the peace talks to an early end. Netanyahu has suggested at least some of the restraints will be lifted.

Clinton said the Obama administration believes Israel should extend the moratorium, but she also said it would take an effort by both sides to find a way around the problem. She spoke with reporters Monday during a flight from Washington to Egypt for the latest round of talks, which began this month in Washington.

The settlement freeze is not the only obstacle negotiators face. The two sides disagree over what to discuss first: security or borders.

Story: Netanyahu: Settlement freeze won't be extended

A senior Abbas aide, Mohammed Ishtayeh, appeared to take a hard line on the issue of settlement construction, telling reporters that an Israeli extension of its partial freeze would not signal progress in the negotiations but rather progress in "confidence building."

"The freeze on settlements (construction) is not a topic in the negotiations," he said. "Removing settlements is."

From the Israeli said, Netanyahu spokesman Mark Regev said, "If the expectation is that only Israel has to show flexibility then that is not a prescription for a successful process."

The Palestinian group Hamas, which rules the Gaza Strip and doesn't recognize Israel, isn't party to the negotiations. Hamas spokesman Ismail Ridwan described the negotiations as a "shameful path" and said they would not benefit the Palestinians. "Instead, they will serve the (Israeli) occupation and provide it with a green light to continue its crimes," he said.

Ahmed Jaabari, the shadowy leader of Hamas' military wing, threatened a wave of violence intended to derail the talks.

As evidence of the tense situation with Gaza, Hamas security officials said four Palestinians in northern Gaza were wounded by an Israeli tank shell. The Israeli military said soldiers opened fire after a group of Palestinian militants approached the border and fired a rocket-propelled grenade.

Slideshow: Mideast clashes during peace talks (on this page)

Clashes along the border between Israel and Gaza are common. Soldiers this week killed three Palestinians after coming under fire from Gaza.

Israeli Interior Minister Eli Yishai spoke out Tuesday against the settlement slowdown, reflecting the intense pressure on Netanyahu to resume construction once the moratorium ends.

"The freeze in the West Bank is incorrect and its good that it is ending," Yishai told Israel Radio as the meetings in Egypt were taking place.

On Sunday, Netanyahu seemed to reject a total freeze on construction. He said Israel would not build thousands of planned homes. But without providing details or a timeline, he said, "We will not freeze the lives of the residents."

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Photos: Mideast peace talks

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  1. Secretary of State Hillary Clinton holds Middle East peace talks with Israeli Prime Minister Benjamin Netanyahu, left and Palestinian Authority President Mahmoud Abbas at the State Department in Washington, DC on Sept 2. Netanyahu and Abbas expressed determination to reach a peace agreement as the first direct negotiations between the two sides in nearly two years got underway. (Jim Lo Scalzo / EPA) Back to slideshow navigation
  2. A Palestinian construction worker on the roof of a building where construction is continuing in the Jewish settlement of Tekoa, near the West Bank town of Bethlehem, on Feb. 2. Speaking at the White House on the eve of the talks, Israeli Prime Minister Benjamin Netanyahu referred to Palestinian President Mahmoud Abbas as "my partner in peace," while Abbas promised to "spare no effort" in trying to reach a settlement. (Yossi Zamir / EPA) Back to slideshow navigation
  3. Palestinian militants with the Democratic Front for the Liberation of Palestine pose with weapons during a training exercise in the soutern Gaza Strip Thursday, as Palestinian and Israeli leaders meet in Washington DC. (Abed Rahim Khatib / EPA) Back to slideshow navigation
  4. Israeli troops check IDs of Palestinians on Sept. 2 at a checkpoint near the site where Palestinian gunmen killed four Israeli settlers earlier this week, outside the Palestinian city of Hebron in the occupied West Bank. (Hazem Bader / AFP - Getty Images) Back to slideshow navigation
  5. An Israeli flag belonging to a pro-Israel activist is seen while other activists rally for religious freedom and the rights of Egyptian Christians during a rally on Pennsylvania Avenue in front of the White House, Sept.2, in Washington, DC. The group gathered near the White House while leaders from the Middle East, including President Hosni Mubarak of Egypt, are in DC for Mideast peace talks. (Brendan Smialowski / Getty Images) Back to slideshow navigation
  6. Left-wing activists confront Israeli border police trying to restrain them Wednesday during a protest against plans to intensify the Jewish presence in Israeli annexed Arab east Jerusalem, near the neighborhood of Silwan. (Ahmad Gharabli / AFP - Getty Images) Back to slideshow navigation
  7. A toy gun-toting Palestinian boy sits on an unidentified man's shoulders during a rally Tuesday in the Jebaliya Refugee camp in the northern Gaza Strip, where they were celebrating a militant attack in the southern West Bank. A Palestinian gunman opened fire on an Israeli vehicle traveling in the West Bank on Tuesday, killing four passengers, authorities said, in a deadly attack that cast a long shadow over Mideast peace talks that started Wednesday. (Hatem Moussa / AP) Back to slideshow navigation
  8. Israeli police gather Tuesday at the site of an attack near the Jewish settlement of Kiryat Arbah after a Palestinian gunman opened fire, killing four passengers. The sticker on the car reads in Hebrew: " God is the King." (Sebastian Scheiner / AP) Back to slideshow navigation
  9. An Israeli soldier points a gun toward a Palestinian on the rooftop of his house as he orders him to get back inside after a group of Jewish settlers vandalized the building Wednesday, a day after a Palestinian attack that left four Israelis dead. (Bernat Armangue / AP) Back to slideshow navigation
  10. Israeli soldiers hold a Jewish settler after he vandalized a Palestinian house Wednesday, a day after a Palestinian attack that left four Israelis dead in the West Bank town of Hebron. (Bernat Armangue / AP) Back to slideshow navigation
  11. A Palestian man walks near a section of Israel's separation barrier Tuesday in the West Bank town of Bethlehem. (Bernat Armangue / AP) Back to slideshow navigation
  12. Palestinian demonstrators are reflected in a framed photograph as they hold hold pictures of their relatives killed while carrying out attacks in Israel and whose bodies are held in Israel. The protesters in the West Bank city of Nablus demanded the return of their relatives' remains. (Nasser Ishtayeh / AP) Back to slideshow navigation
  13. A Palestinian protester throws stones at Israeli troops, not pictured, while wearing a mask of West Bank villager Abdullah Abu Rahmeh, during a protest Friday against Israel's separation barrier in the village of Bilin near Ramallah. Earlier the European Union's top diplomat criticized Israel over the conviction of Rahmeh, a well-known Palestinian activist who leads protests against the West Bank separation barrier. (Majdi Mohammed / AP) Back to slideshow navigation
  14. A Palestinian family sits outside the cave in which they live in Yatta, in the West Bank, Aug. 26. About 90 members of the Houamdie family live in this area. According to the elderly people from the family, they have been living in this area for 200-300 years and are not allowed by the Israeli army to build houses. (Abed Al Hashlamoun / EPA) Back to slideshow navigation
  15. Israeli border police pass torched vehicles in the East Jerusalem neighborhood of Silwan on Aug. 26. Palestinians torched half a dozen vehicles and threw stones and firebombs at Israeli police after Jewish settlers approached a mosque, local residents and police said. (Ammar Awad / Reuters) Back to slideshow navigation
  16. A Palestinian waits to cross a checkpoint to work in Israel at the separation barrier in the West Bank town of Bethlehem on Aug. 23. Thousands of Palestinians cross daily into Israel as laborers who are required to have special permits issued by Israeli authorities. (Abed Al Hashlamoun / EPA) Back to slideshow navigation
  17. An Israeli Jewish man walks next to a concrete wall in the Jewish neighborhood of Gilo in Jerusalem Aug. 15. Israel removed a concrete wall erected in 2001 to protect Israelis against gunfire from the nearby Palestinian village of Beit Jala. The military said the removal was due to a reduced security threat and increased coordination with the Palestinian security forces. (Sebastian Scheiner / AP) Back to slideshow navigation
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Explainer: Quest for Mideast peace: An overview

  • Palestinian President Mahmoud Abbas is pressing ahead with a bid to seek United Nations recognition of a Palestinian state, despite a threatened U.S. veto. U.S. President Barack Obama says the path to peace in the Middle East is through resumption of direct talks between Israel and the Palestinians. The last round of such talks broke down in 2010 with the two sides far apart on key issues. Click on the links on the left to find out more.

    Sources: Reuters, The Associated Press, PBS, BBC, Council on Foreign Relations

  • Jerusalem

    Image: Jerusalem's Old City
    AP file

    Israel claims the entire city as its own undivided capital. Palestinians want East Jerusalem, which includes the Old City and its sites sacred to Muslims, Jews and Christians, to be the capital of a future Palestinian state.

    Israeli Prime Minister Benjamin Netanyahu has endorsed the idea of a Palestinian state in principle, but says Jerusalem would remain Israel's "indivisible and eternal" capital. Israel's claim to the eastern part of Jerusalem is not recognized internationally.

  • West Bank

    Image: Israeli soldiers patrol the old city in the West Bank city of Hebron
    Abed Al Hashlamoun  /  EPA

    One of the disputed Israeli-occupied territories with areas of limited Palestinian self-government. The scores of Jewish settlements that dot the West Bank have long been a sore point in Mideast peacemaking. Israel began settling the territory soon after capturing it along with Gaza and East Jerusalem in the 1967 war.

    The Palestinians say the settlements, now home to roughly 500,000 Israelis interspersed among 2.6 million Palestinians, are gobbling up land they claim for a future state. The international community considers them illegal, and President Barack Obama has been an outspoken critic.

    The West Bank encompasses important cities such as East Jerusalem, Ramallah and Bethlehem. It would make up the bulk of an independent Palestinian state alongside Israel, with precise borders to be drawn at the peace table. Expansion of Jewish housing makes those borders ever more complicated.

    A 10-month slowdown in West Bank housing construction by Israel expired in late September, and the Israeli government did not extend it despite international pleas to do so. That contributed to a breakdown in the last round of peace talks between the two sides.

  • Gaza Strip

    Image: Gaza Strip
    Kevin Frayer  /  AP

    This 25-mile-long by 7-mile-wide strip of land lying on the eastern coast of the Mediterranean Sea is home to about 1.6 million Palestinians and is under firm control by the militant Hamas movement. Hamas is opposed not only to the peace talks but also to Israel's very existence.

    Gaza, which is also supposed to be part of a negotiated Palestinian state, has been the staging point for rocket attacks on Israel, which has responded with a economically crippling naval blockade of the territory.

    Most of Gaza's residents are from refugee families that fled or were expelled from the land that became Israel in 1948. Of these, most live in impoverished refugee camps to which the United Nations delivers basic services such as health and education.

    Israel began curtailing trade and travel in Gaza after Hamas won Palestinian parliamentary elections in 2006. Israel and many Western nations consider Hamas a terrorist organization. Hamas seized control of Gaza the following year, expelling members of the rival Fatah movement.

    Gaza's Islamist Hamas rulers say they will never give Israel what it most wants from a Middle East deal, which is recognition of the Jewish state and a legitimate place in the region. They see their Fatah rivals in the West Bank, who have been open to negotiating with Israel, as appeasers and traitors to the Palestinian cause.

  • Golan Heights

    A fortified and strategically important hilly area on the border of Syria, Israel, Lebanon and Jordan. The Golan Heights were part of Syria until 1967, when they were captured by Israel during the Six-Day War. Israel unilaterally annexed the Golan Heights in 1981.

    Syria has said it wants to secure the return of the Golan Heights as part of any peace deal. A deal with Syria would also involve the dismantling of Jewish settlements in the territory.

  • Egypt

    Egypt in 1979 became the first Arab state to sign a peace deal with Israel. Despite Arab world pressure, Cairo has adhered at least to the formal requirements of its peace treaty.

    Egypt, under Hosni Mubarak, had played the role of mediator at several very critical junctures in the peace process with the Palestinians and was a key U.S. ally in the tumultuous region. The U.S. underwrites much of Egypt's foreign aid.

    But more recently, Israel's relations with Egypt have deteriorated since Mubarak was ousted by a popular uprising in February 2011. In September, an Egyptian mob stormed the Israeli Embassy in Cairo and forced Israeli diplomats to be evacuated.

  • Syria

    Damascus is one of Israel's harshest opponents, and supports a number of armed groups that carry out attacks against Israel. Israel has condemned Syria for its support for the Hamas Islamic government in Gaza.

    Tensions between Syria and Israel rose in 2010 after Israeli President Shimon Perez accused Syria of supplying Scud missiles to the Lebanon-based Shiite movement Hezbollah, which the U.S. classifies as a foreign terrorist organization. Israel has warned that it will respond to missile attacks from Hezbollah by launching immediate retaliation against Syria itself.

    Hamas and other radical Palestinian groups based in Syria have rejected any move by the Palestinian Authority to resume direct peace talks with Israel.

    Syria has accused Israel of posing a threat to the world with its "huge military nuclear arsenal."

    Syrian President Bashar Assad's regime has found itself under international pressure recently, condemned by leaders around the world for a bloody crackdown on anti-government demonstrators that began in mid-March 2011.

  • Jordan

    Jordan is considered a very important country in resolving the Mideast conflict due to its proximity to Israel and the occupied territories and its large population of Palestinian refugees.

    Jordan, along with Egypt, are the only Arab states to have signed peace treaties with Israel. Jordan is also a strategic ally to the United States in the Middle East.

    Amman has long maintained close security cooperation with Israel but has criticized Israeli treatment of Palestinians and fears a spillover of violence if Israel does not make peace with the Palestinians.

    Jordan's King Abdullah was quoted as saying in September 2011 that Jordan and the Palestinians were now in a stronger position than Israel, telling a group of academics that the Arab uprisings had weakened Israel's position.

  • Lebanon

    Lebanon, a small Middle East sovereign state, has long been the staging ground of proxy wars in the region. It is bordered by Syria to the north and east, and Israel to the south.

    Dozens of private armies grew out of Lebanon's 15-year civil war that ended in 1990 and still flourish 20 years later.

    A period of relative stability was shattered in 2006 when an all-out 34-day war between Hezbollah, a Shiite Muslim political group with a militant wing the U.S. classifies as a terrorist organization, and Israel caused significant civilian deaths and heavy damage to Lebanon's civil infrastructure.

    Hezbollah is a central player in Lebanon. Hezbollah sets its own military strategy and it makes decisions that could lead to war without the involvement of the Lebanese state.

    The power balance worries the U.S. and Israel, Hezbollah's sworn enemy.

    U.N. peacekeepers have been charged with monitoring Lebanon's southern border with Israel since 1978. The force was boosted to almost 12,000 troops after Israel and Iranian-backed Hezbollah fought in 2006.

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