Israeli Prime Minister Ehud Barak was willing to consider the possibility of dividing Jerusalem, reported The Jerusalem Post, quoting a senior official aboard his return flight.
Barak returned from the US Wednesday evening to face the nation and explain the failure of the 15-day summit.
Admitting he was disappointed with the outcome of the talks, Barak emphasized that Israel had formally given up nothing and stressed that, at least for the time being, the Palestinians would be getting nothing more from Israel, said the daily.
The source said that US President Bill Clinton's last proposal on Jerusalem, which Barak was ready to accept, but which was rejected by Arafat, involved giving the Palestinians the right to call sections of Jerusalem part of the future Palestinian state, added the daily.
It also included giving Arafat far-reaching administrative authority in most of Jerusalem's Arab neighborhoods, allowing several of neighborhoods outside Jerusalem's eastern border to be annexed to the future Palestinian state, and giving Arafat wide religious and civil powers within the Old City.
In return, Barak would have received the right to annex several Jewish settlement blocs near Jerusalem, gained international and Palestinian recognition of Israel's right to the redrawn Jerusalem, and would have also received rights for Jews to pray on the Temple Mount, said the source.
The source added that "logically" all outstanding promises to the Palestinians are now on hold, meaning that there will be no additional land transfers or prisoner releases.
He noted, however, "the proverbial crack in the door is still there," and indicated that talks could be resumed within weeks. But he dismissed the idea of another summit in the near future.
"We found a Palestinian leadership unripe for decisions. Now they will have to do some real thinking about what they stand to lose. Then we will see," he said.
He said the time element is an important factor and that in talks between Barak and both US presidential candidates, the latter made it clear that "after this failure, they would take their time before jumping into the debate."
The source told the daily that following the summit, the Palestinians will not find much empathy for their positions and that most Western nations would refuse to recognize a Palestinian state, if declared unilaterally on September 13th as planned.
In the last meeting between Arafat and Barak, said the official, no mention of September 13th was made, added the daily.
"The sides know the consequences of unilateral actions, and neither wants to let the situation deteriorate into violence," he said - Albawaba.com
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