In addition, Egypt has urged Israel to halt settlements in the West Bank and to stop actions that would create obstacles to regional peace talks.

This allays fear that President Bush might, for political reasons, yield to Prime Minister Yitzhak Shamir's refusal to halt new settlements.

"The next Israeli government must halt settlements immediately."

The statement suggested that Al Fatah wanted to halt Jewish settlements in the West Bank and Gaza.

But Mr. Sharon has also emphasized his opposition to halting Jewish settlements, a crucial point in that plan.

On 26 June 2009 France and the rest of the G8 called on Israel to halt Jewish settlements in the Palestinian territories as a key step toward a renewed peace drive.

Several Arab countries led by Egypt and Saudi Arabia offered this summer to end their compliance with the boycott if Israel agreed to halt settlements in its occupied territories.

The White House had threatened a veto if the guarantees were included because Israel refused to halt new settlements in the occupied territories.

When the new Israeli Government implements the decision to halt political settlements, that will also test the sincerity of Arab intentions.

The Administration hopes it can engineer a trade-off in which Israel might halt settlements in return for concessions from the Arabs, thereby sparing the Administration from having to use its economic stick.