Despite a first meeting in which Mr Netanyahu repeatedly complained about the Palestinian position and asked Mr Kerry whether they “really want peace”, diplomats involved in the talks said progress had been made.
Mr Kerry is expected back in the region in a couple of weeks. Meanwhile, senior members of his team have remained in Jerusalem to continue discussing the framework agreement, which is expected include an Israeli commitment to pursue a peace treaty based on the pre-1967 borders, with territorial exchanges that will keep the settlement blocs in Israeli territory.
While some cabinet ministers have said they believe the Prime Minister has accepted this, other sources claim that “Netanyahu is playing for time until the Palestinians turn down the deal so he won’t be blamed for the failure of the talks.”
In a meeting with Likud parliamentarians on Monday, Mr Netanyahu sounded ambiguous when he detailed the difficulties in the negotiations. However, he also set out the rationale for a two-state solution. He stressed he was against removing settlements “of historical importance to the Jewish people such as Hebron and Bet El”, even though they are outside the settlement blocs expected to stay within Israel in a future peace agreement.
Mr Netanyahu repeated his insistence on Palestinian recognition of Israel as a Jewish state. But he added “there are two million Palestinians, and the questions is what to do with them”. If that put some of his MKs on guard, in the next sentence he went even further: “I don’t want a bi-national state and I don’t want them as citizens or subjects.”
Right-wing politicians have already begun warning against an upcoming agreement. Habayit Hayehudi leader and Economics Minister Naftali Bennett said on Tuesday at the Institute for National Security Studies in Tel Aviv: “We will never agree to give up united Jerusalem under Israeli sovereignty and to an agreement based on the 1967 lines. We won’t sit in a government that will divide our capital and endanger our security.”
Palestinian President Mahmoud Abbas said on Monday that Mr Kerry was making “immense efforts” but that “the process is very difficult”.
Meanwhile, Mr Netanyahu’s senior political partner, Foreign Minister Avigdor Lieberman, issued a mixed message on Sunday at a conference of Israeli ambassadors when he praised Mr Kerry and said that “any alternative we will receive from the international community will be worse for us than the Kerry proposal.”
Mr Lieberman added that he supported a “comprehensive and real diplomatic solution”, and extolled the Israel-US relationship as “the basis for our foreign policy”. However he added one caveat: “Without exchange of territory and population, I won’t support a peace agreement.”
Mr Lieberman’s controversial position is that, as part of drawing a new border between Israel and Palestine, major concentrations of Arab-Israeli citizens will also become Palestinian territory and their inhabitants lose their Israeli citizenship and become Palestinian citizens.
“This is not transfer,” he said. “No one will be deported or disenfranchised, but the border will move to Route Six [leaving large Arab towns and villages in Palestine].”
Mr Lieberman’s demand is not part of Israel’s official position in the talks and has not been presented to the Palestinian side.
Even some of his cabinet colleagues openly dismissed the idea, including Interior Minister Gideon Saar, who said on Tuesday during a visit to the Israeli-Arab town of Sakhnin that “an Israeli citizen is not an object you can move around as part of a diplomatic agreement.
“Israeli-Arab citizens are equal citizens and in any future peace agreement their citizenship is not to be violated.”
