Israel's Olmert meets cabinet dissident

JERUSALEM, Jan 15 (Reuters) - Israeli Prime Minister Ehud Olmert met a senior cabinet minister on Tuesday who has threatened to pull his right-wing party out of the coalition government over peace talks with the Palestinians.

Olmert met Minister for Strategic Affairs Avigdor Lieberman who leads Yisrael Beiteinu, which appeals to Russian-speaking immigrants and accounts for 11 of the 78 votes the centrist Olmert can count on in a parliament comprising 120 seats.

It was not immediately clear whether Lieberman would make good on his threat to bolt the coalition after Olmert defied his call to restrict the scope of U.S.-sponsored peace talks and agreed to negotiate on issues that include dividing Jerusalem.

An aide in Lieberman's office declined to give details of the meeting and said Lieberman would make an announcement regarding his party's future on Wednesday in parliament.

At Olmert's office, an official said the two met alone to discuss a range of policy, diplomatic and security issues. There was "a good exchange of views", the official said.

Lieberman has threatened to quit the coalition once talks with the Palestinians moved to discussing "core issues" including borders and the fate of Jerusalem and Palestinian refugees, which must be resolved to end decades of conflict.

Israel and the Palestinians opened their most serious peace talks in seven years on Monday, urged by U.S. President George W. Bush to reach a deal within a year, but domestic troubles have weakened both partners in their home constituencies.

As well as the threat to weaken his coalition government, Olmert may face new calls to resign after an inquiry into the 2006 Lebanon war issues its final report on Jan. 30.

Lieberman's party, which appeals to many voters in Israel's large immigrant community from the former Soviet Union, joined Olmert's coalition after the Lebanon war and its departure would not immediately collapse the government.

Many Israeli pundits speculate Yisrael Beiteinu could be substituted by the small, left-wing Meretz party which has long been an advocate of peace talks with the Palestinians. The main coalition partners are Olmert's Kadima and the Labour Party.

During a visit to Israel last week, Bush told Lieberman and other coalition members that Olmert was a strong leader who they should keep in power.

Ha'aretz newspaper said on Tuesday that Olmert would continue to promote the peace push "even if we have to pay a political price."

Israeli Foreign Minister Tzipi Livni told parliament she was "prepared to make significant territorial concessions" to further Israel's interests.

After the talks opened in Jerusalem on Monday, chief Palestinian negotiator Ahmed Qurie said that core issues had indeed been discussed.

"We started today talking about all the core issues, Jerusalem, refugees, borders, settlements. We talked about these issues in general. The talks were positive but the path ahead is difficult," Qurie said.

The Moldovan-born Lieberman said discussing core issues would be "crossing a red line".

Israeli officials said Olmert was seeking a deal that would outline a "framework" for a Palestinian state with implementation delayed until the Palestinians can ensure Israel's security.

Palestinian President Mahmoud Abbas wants a final peace treaty enabling him to declare a state by the end of the year.

However, his loss of control in the Gaza Strip to Hamas Islamists leave that goal in grave jeopardy. Hamas and Israeli forces traded fire in the bloodiest violence for months on Tuesday. Thirteen of 18 Palestinian dead were Hamas militants. (Additional reporting by Ari Rabinovitch, Editing by Alastair Macdonald)