Rockets, settlements raise concerns at Mideast peace talks

JERUSALEM (CNN) -- Israelis complained about rocket attacks from Gaza while Palestinians questioned Israeli plans for West Bank settlements during peace talks Wednesday.

The talks are the first since the Annapolis, Maryland, peace conference two weeks ago, during which both sides pledged to make serious concessions in an effort to reach a peace deal by the end of 2008.

The discussions in Jerusalem, led by Israeli Foreign Minister Tzipi Livni and her Palestinian counterpart, Ahmed Qurei, came hours after rockets pummeled southern Israel, prompting the mayor of Sderot to resign in protest.

Israeli lawmaker Yuval Steinitz of the right-wing Likud party questioned whether the talks should have even taken place as rockets fell. He cited a recent comment from former British Prime Minister Tony Blair, now the Mideast Quartet's envoy to the Middle East.

"(Blair) said two weeks ago that if he (was) an Israeli, he would not negotiate when rockets are falling on Sderot on a daily basis," Steinitz said. "I think this is common sense and if Tony Blair could understand it, I wonder why Tzipi Livni and (Israeli Prime Minister) Ehud Olmert failed to understand."

Meanwhile, Palestinian negotiator Saeb Erakat accused Israel of continuing "the same policies that killed the trust" with Palestinians, including announcing plans to build more than 300 housing units in the West Bank settlement of Har Homa.

The Palestinians want Israel to pull out all of its settlements in the West Bank as part of a future peace plan. Har Homa is particularly sensitive because of its location inside the Palestinian side of East Jerusalem, under the 1948 boundary.

Har Homa is controlled by Israel, which broke ground on settlements there in 1997 under then-Prime Minister Benjamin Netanyahu during Olmert's tenure as Jerusalem's mayor. Israeli businesses continue to advertise Har Homa as an up-and-coming neighborhood that caters to young Israeli families.

In an interview with USA Today, U.S. Secretary of State Condoleezza Rice said she admonished Israeli officials for the attempt to expand Har Homa, a move she said is not helpful to the fragile peace process.

"This is a time to build confidence between the parties and ... something like the Har Homa activity undermines confidence," Rice told the newspaper. "It doesn't help to build confidence. And it's really important that as they go into negotiations, there isn't a sense that one party or the other is trying to take steps on the ground that can prejudge final status, a sort of creating facts on the ground."

She said she was told that the expansion was part of a plan that was in place before the Annapolis conference, but she stressed that both parties have an "obligation to be very careful about activities that undermine confidence."

Erakat also chided Israel for its military actions in Gaza that have left dozens of Palestinians killed or wounded and more than 160 arrested, as well as its border closures in the West Bank.

"This is the same policy that killed the peace process, and the Israeli government must understand that (it must choose) either the track of settlements, walls, incursions, assassinations, closures, sieges and so on, or (the) track of negotiations and peace," Erakat said.

The two sides will resume talks after next week's Palestinian donors' conference in Paris and the Muslim Eid al-Adha holiday, which begins on Thursday, an Israeli Foreign Ministry spokesman said.

The situation in Gaza could continue to dampen the peace process. Speaking hours after Wednesday's rocket attacks, Israel Defense Forces Chief of Staff Gabi Ashkenazi warned that a stronger military operation in Gaza is increasingly likely, according to the Israeli daily Haaretz. Watch Israeli incursion into Gaza »

He said the ongoing, limited operations have resulted in "a reduction in the ground threat and the firing of rockets but does not stop it," according to Haaretz. "We will come to the point where we will have to carry out the big operation."

Israel's Security Cabinet convened Wednesday to discuss possible military responses to the ongoing Qassam rocket fire from Gaza into southern Israel.

Sderot, an Israeli town near the Gaza border, is the main target of the attacks, which the Israeli military estimates happen every three hours.

Sderot and its surrounding areas were hit by 19 Qassam rockets Wednesday morning alone. One woman sustained minor injuries.

While the attacks have resulted in few deaths or serious injuries, the people of Sderot have expressed their frustration at having to live under constant assault.

After Wednesday's attack, Eli Moyal announced his resignation, saying he could no longer function as Sderot's mayor under the constant bombardment of rockets. He said he hoped his resignation would move the Israeli government to take stronger military action to defend the residents of Sderot.

The Israeli military has launched numerous airstrikes and ground incursions in Gaza to clamp down on the rocket fire, which has increased significantly since Hamas seized control of the Palestinian territory in June.

Israel's government labeled Gaza a "hostile territory" in September, setting in motion a wide-ranging crackdown that includes the military operations and a limit on power supplies to the region. E-mail to a friend

CNN's Michal Zippori and Shira Medding contributed to this report

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