Ramallah  - Despite Israeli denials, a United States official confirmed Thursday that Israel and the Palestinians have agreed to negotiate the future of Jerusalem.

US Consul General in Jerusalem Jake Walles said the parties are negotiating the establishment of a Palestinian state on the basis of the borders that existed before the
1967 Arab-Israeli war, in which Israel captured the West Bank from Jordan and the Gaza Strip from Egypt.

The parties are discussing the 1967 borders, which include the West Bank, the Gaza Strip, East Jerusalem and part of the Dead Sea, Walles said in an interview published in the Ramallah-based al-Ayyam.

Both sides have accepted this as a basis for negotiations, he said, adding they both also agreed to make territorial changes to create the final borders.

Israel has said that neither Jerusalem nor the Jordan Valley, which includes the Dead Sea, are being negotiated. The future of the disputed city is seen as the most sensitive of the core issues of the Israeli-Palestinian conflict that need to be settled.

Israel wants to annex major settlement blocs in the West Bank, and has reportedly offered a territorial exchange to make up for the lost land.

Walles told the Palestinian newspaper that the US was not looking for a transitional solution to the conflict and present it to the upcoming Quartet meeting in New York. The quartet of Middle East peace mediators includes the US, European Union, United Nations and Russia.

The goal of the negotiations, he stressed, remains to reach a final settlement before the end of the year. The US, he said, does not intend to surprise anyone by presenting solutions that will not be helpful to the peace process.

"We see our role as a facilitator," he said in a quote translated into Arabic. "If both sides see that we can help, then we will consider it. But we are not going to do anything that either party may think is not going to help."

Walles, said the newspaper, admitted that Israel has intensified its settlement activities after the November Annapolis meeting.

"We have seen very little progress in removing settlement outposts, for example, which is one of the obligations of the road map, or toward freezing settlements, which is also an obligation of the road map," he said.

The US official said also that his government would like to see Israel do more to facilitate movement of Palestinians, which does not only make daily life easier for Palestinians but also is an important factor in revitalizing the economy. (dpa)