Israel sees no full peace deal in '08-minister

JERUSALEM, Feb 11 (Reuters) - Israel's vice premier said on Monday the aim of U.S.-backed peace talks between Israel and the Palestinians was to reach agreement on statehood principles this year, rather than an accord spelling out all the details.

The comments by Haim Ramon, Prime Minister Ehud Olmert's top deputy, appeared on the surface to contradict those made by U.S. President George W. Bush last month in a visit to the West Bank.

Bush set the goal of trying to get both sides to sign a "peace treaty" before his term ends next January, though he did not spell out what that might entail.

Ramon said Bush's expectations for the coming year were aligned with Israel's, whereas Palestinian President Mahmoud Abbas wants a final peace treaty enabling him to declare a state by the end of the year.

Like Ramon, Palestinian Prime Minister Salam Fayyad, who heads Abbas's government in the West Bank, has said he sees little chance of reaching a final resolution in 2008.

Ramon said the "declaration of principles" sought by Israel would address final-status issues like "what will be in Jerusalem" as well as statehood borders and the future of Palestinian refugees.

But Ramon said the declaration of principles would not settle thornier questions like how Jerusalem's Old City, holy to Muslims, Jews and Christians, would be administered.

"It has to be detailed enough in order to implement it in the years that will come after 2008, two to three years after, in a process of implementation," Ramon told reporters.

"INTENSIFY EFFORTS"

Like Fayyad, Ramon was critical of the pace of negotiations, led on the Israeli side by Foreign Minister Tzipi Livni and on the Palestinian side by former Prime Minister Ahmed Qurie.

"Both sides have to intensify their efforts in order to reach a declaration of principles, especially now when the war in the south is increasing," Ramon said of Israel's campaign in the Gaza Strip against Hamas Islamists, who seized the territory in June after routing Abbas's secular Fatah forces.

Olmert's government has already lost one of its right-wing coalition partners over the peace talks. The ultra-religious Shas party has also threatened to bolt if the talks focus on Jerusalem.

"Sooner or later, we will deal with Jerusalem and then we will have problems," Ramon acknowledged.

He said if Olmert and Abbas can reach agreement on statehood principles in 2008, then the declaration should be presented to the Israeli public in elections sometime in 2009. "Of course this will affect the coalition ... because the government will resign, not just Shas," Ramon said.

Qurie warned Israel over the weekend that its military campaign in Gaza would affect the peace talks.

He said Israel has yet to meet its obligations under a long-stalled "road map" peace plan, which calls for halting all Jewish settlement activity and uprooting outposts built without government authorisation in the occupied West Bank.

Ramon said Olmert has curbed settlement activity within the West Bank, though Israeli officials say construction continues in disputed areas in and near Jerusalem.

Ramon said of the outposts: "I admit that we have a problem." He blamed "internal political reasons" for delaying their removal and said he hoped Israel would act soon.

The road map calls on the Palestinians to rein in militants, and Olmert has vowed not to implement any statehood agreement until Abbas does so in the West Bank, where his Fatah faction holds sway, and in the Hamas-controlled Gaza Strip.

Ramon said Abbas's security forces in the West Bank have improved but were "still far from meeting their requirement". (Editing by Caroline Drees)