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Israel offered the Palestinians land in the Negev in exchange for West Bank settlement blocs.

The idea was part of a draft peace deal that Israeli Prime Minister Ehud Olmert presented to Palestinian Authority President Mahmoud Abbas this week, Ha’aretz reported Tuesday.

Under the proposal, which was leaked to the newspaper, Israel would keep West Bank settlement blocs, turn the West Bank security fence into a border and evacuate settlers east of it. In exchange for what would be, effectively, an annexation of 7 percent of West Bank land, Israel would cede a parcel of the Negev to the Gaza Strip.

The Negev land would be equivalent to 5.5 percent of the West Bank; the shortfall would be made up for by a road connecting Gaza and the West Bank, allowing for free Palestinian passage between the territories.

According to Ha’aretz, the Gaza annexation would take place only after Abbas reestablishes his authority over the Gaza Strip, ending Hamas rule there.

The P.A. leadership has indicated a willingness to consider territorial exchanges, but other disputes remain.

Both sides want sovereignty in Jerusalem, which Israel has vowed to keep as its undivided capital. According to Ha’aretz, Olmert and Abbas agreed to defer the Jerusalem issue to future negotiations.

Israel also has demanded that the future Palestinian state be demilitarized, while the Palestinians want an armed force capable of defending against “outside threats,” Ha’aretz reported.

According to the newspaper, Olmert’s proposal includes a “detailed and complex formula” for solving the issue of Palestinian refugees. Israel wants the refugees resettled in a future Palestinian state while the Palestinians want them to be granted a “right” to land that is now in the Jewish state.

U.S. Secretary of State Condoleezza Rice will visit Jerusalem and Ramallah next week to try to move Israeli-Palestinian peace talks forward.

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