FACTBOX-Major issues in Israeli-Palestinian peacemaking
July 19 (Reuters) - Israel and the Palestinians have laid the groundwork to resume direct peace talks after almost three years of stalemate, U.S. Secretary of State John Kerry announced on Friday.
If the two sides do indeed sit down together in the coming days, as planned, they would face the same array of problems that have confounded progress in years of on-off talks:
The Palestinians want to create an independent state in the West Bank and the Gaza Strip, with Arab East Jerusalem as their capital - land Israel seized in the 1967 Middle East war.
Israeli Prime Minister Benjamin Netanyahu has resisted calls for talks to be based on the pre-war 1967 lines, saying the shape of any Palestinian state must be decided in the negotiations. He also says a future Palestine must be demilitarised.
Many right-wingers in Netanyahu's own cabinet have strongly rejected the notion of returning to the 1967 lines, claiming biblical Jewish birthright to all the land from the Mediterranean sea to the river Jordan.
Adding to the complications, the Palestinians are deeply divided, with Gaza and the West Bank run by different parties that are virulently opposed to each other. Hamas Islamists, who govern Gaza, denounce the notion of direct talks and do not recognise Israel's right to exist.
Israel has built extensive settlements in the West Bank and East Jerusalem, creating homes for half a million Jews. Palestinian President Mahmoud Abbas has repeatedly called for a total freeze of their expansion during any talks - an issue that caused the collapse of the last negotiations in 2010. Palestinians say the settlements, deemed illegal by the World Court, should be evacuated, but have left open the door for some land swaps to enable some blocs to remain in Israeli hands. However, under any deal, some settlements would surely find themselves within a Palestinian state, which some rightist and national religious Israeli parties would find intolerable.
The status of Jerusalem is potentially the toughest issue to resolve. The Palestinians want East Jerusalem, which includes the Old City, with sites sacred to Muslims, Jews and Christians, to be their capital. Netanyahu has said Jerusalem must remain Israel's "indivisible and eternal" capital and has broad political backing within Israel for the demand. Unlike the West Bank, Israel has annexed Jerusalem, a move that has not been recognised internationally. Numerous Jewish settlements across the east of the city complicate any territorial division.
Palestinians have long demanded that refugees who fled or were forced to leave in the war of Israel's creation in 1948 should be allowed to return, along with millions of their descendants, currently living in camps dotted around neighbouring states and in the West Bank and Gaza. Israel has rejected this, fearing such an influx could jeopardise the Jewish majority in Israel. Palestinian negotiators have signalled in the past that they would accept "a just and agreed-upon" solution for refugees as laid out in a U.N. resolution that mentions compensation for those who settle elsewhere.
(Writing by Crispian Balmer; Editing by Will Waterman)