Before Mideast talks, Clinton says 'time is ripe' (AP)

SHARM EL-SHEIKH, Egypt � As Israeli Prime Minister Benjamin Netanyahu and Palestinian President Mahmoud Abbas prepared for a second round of negotiations Tuesday, U.S. Secretary of State Hillary Rodham Clinton said the "time is ripe" for Mideast peace.

The most immediate dispute between the two sides surrounds a soon-to-expire curb on new construction for Israeli settlers in the West Bank. The Palestinians want the curb extended beyond the current Sept. 26 deadline, but Netanyahu has suggested at least some of the restraints will be lifted.

Clinton said Monday the Obama administration believes Israel should extend the moratorium, but she also said it would take an effort by both sides to find a way around the problem.

"We recognize that an agreement that could be forged between the Israelis and the Palestinians ... that would enable the negotiations to continue is in the best interests of both sides," she said.

Clinton spoke with reporters Monday during a flight from Washington to Egypt for the latest round of the current Mideast peace talks, which began earlier this month in Washington. After her arrival early Tuesday, she met with Egyptian President Hosni Mubarak. As Netanyahu arrived at Sharm el-Sheikh, Clinton was meeting with Abbas.

The settlement freeze is not the only wrinkle in the way of launching the talks in earnest. The two sides are bickering over what to discuss first: security or borders.

Palestinian negotiator Saeb Erekat said late Monday that the agenda for the talks had been agreed upon in Washington.

"The agenda includes final status issues: Jerusalem, borders, settlements and refugees, security and prisoners," he told reporters. "If you want to pick the right path, borders should come first. If you don't want to reach (an agreement) pick some other paths."

A senior Abbas aide, Mohammed Ishtayeh, appeared to take a hard line on the issue of settlement construction, telling reporters in Sharm el-Sheikh Tuesday that an Israeli extension of its partial freeze would not signal progress in the negotiations but rather progress in "confidence building."

"The freeze on settlements (construction) is not a topic in the negotiations," he said. "Removing settlements is."

On Sunday, Netanyahu seemed to reject a total freeze on construction, saying a Palestinian demand for no construction will not happen. He said Israel will not build thousands of planned homes, but without providing details or a timeline added, "We will not freeze the lives of the residents."

President Barack Obama said last week that he had urged Netanyahu to extend the partial moratorium as long as talks were making progress.

Obama also said he'd told Abbas that if he showed he's serious about negotiating, it would give political maneuvering room to Netanyahu on the settlement issue. Abbas knows "the window for creating a Palestinian state is closing," Obama said.

Although some analysts caution that any peace deal faces daunting obstacles, Clinton has said an initial round of talks in Washington on Sept. 2 generated some momentum. They were the first face-to-face talks between the two sides in nearly two years.

After Netanyahu and Abbas meet Tuesday in Sharm el-Sheikh, their talks shift to Jerusalem on Wednesday. Clinton and former Sen. George Mitchell, Obama's special envoy to the region, plan to join the talks.

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Associated Press writers Sarah El Deeb and Matti Friedman contributed to this report.

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