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ISRAEL SET TO TALK 'ISSUES,' RICE SAYS

She leaves the agenda for peace talks with Palestinians vague.

Secretary of State Condoleezza Rice said Thursday that Israel is ready to discuss "fundamental issues" with Palestinians who are now governed by leaders accepted by the Jewish state and the West.

Still, she left the agenda for any peace talks vague.

The top U.S. diplomat, making her first visit to Israel and the occupied West Bank since Palestinian leadership was cleaved into rival governments, also promised that a proposed U.S.-sponsored Mideast conference this fall would be a serious push toward a peace agreement.

"The president of the United States has no desire to call people together for a photo op," Rice told reporters during a morning of meetings meant to demonstrate confidence in the moderate-led Palestinian government in the West Bank. Hamas militants control the smaller Gaza Strip territory.

The visit included its own photo opportunity, a made-for-the-cameras signing ceremony for a U.S. plan to spend about $80-million to improve security services loyal to the West Bank government. The money was pledged previously and is a small donation when compared with European spending on the impoverished Palestinians.

The Bush administration sees the Palestinians' bitter internal split as an opportunity to push for a political settlement between Israel and the Palestinians, using the West Bank as a model.

Rice met earlier with the entire Palestinian Cabinet, a gesture of support for the team of moderates that replaced the Hamas government after the Islamic militants seized Gaza by force in June.

Rice made Prime Minister Salam Fayyad's office her first stop in the West Bank, a measure of the U.S. hopes that the international banker can buttress the perpetually disorganized Palestinian government.

Hamas considers the West Bank-based government illegitimate. A Hamas spokesman, Sami Abu Zuhri, accused Rice of trying to deepen divisions among Palestinians, saying she "is not coming to establish a Palestinian state but to build death squads that will work against resistance groups, including Hamas."

Meanwhile, Palestinian President Mahmoud Abbas, Rice's host at Arafat's old headquarters, said he is ready to work with Israel on a "declaration of principles" as a step toward a full peace agreement.

Israeli Prime Minister Ehud Olmert had floated the idea last week. Such a declaration, as envisioned by Israel, would outline the contours of a future independent Palestinian state, without immediately tackling the most explosive issues in the nearly 60-year-old conflict.

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