JERUSALEM, Jan 11: With a history dogged by failures, Israel and the Palestinians face a daunting task to resolve their decades-old conflict and fulfil US President George Bush's prediction of a peace treaty within a year.

Aiming to score a foreign policy triumph before leaving office next January, Bush paid his first presidential visit to Israel and the occupied West Bank determined to seal a Middle East deal that has eluded previous US administrations.

Bush called on both sides to make the “difficult choices” to enable the “long overdue” creation of a Palestinian state and end Israel's 40-year occupation of Arab land that began after the 1967 war.

“A peace agreement should happen and can happen by the end of this year,” said the blunt-talking US president who also said he aimed to return to the region during the year to further push the peace process.

But while both Israel and the Palestinians welcomed Bush's statements, the careful wording belied the reality of yawning schism still separating them on the most intractable issues of their conflict.

And even Bush's itinerary underscored a major obstacle to any deal.

Unlike his predecessor Bill Clinton, Bush did not go to the Gaza Strip, the territory now controlled by Hamas since a bloody takeover in June.

The action by the Islamist movement regarded as a terrorist group by Israel and the West has split Palestinian society and left president Mahmud Abbas with authority over only part of a future state.

And the Arab world is deeply sceptical about whether Washington — as Israel's closest ally can be an honest broker.

However, Abbas's spokesman Nabil Abu Rudeina called Bush's call to end the occupation “the first step toward a real peace.” “He put the emphasis on a political solution of the Palestinian cause with the end to the occupation and not on security as wanted by Israel,” added Nimr Hammad, an Abbas aide.

Israeli government spokesman Mark Regev meanwhile said that “what was said by the president is in accordance with the understandings between Israel and the US” and “provides a positive background for direct talks between us and the Palestinians.” The two sides are due to begin discussing the core issues next week, Regev said.

In his discourse, Bush sketched the outlines of the deal that he sees taking place: Israel will have to stop settlement expansion, the Palestinians will have to dismantle “terror infrastructure,” the 1967 borders will have to be modified by mutual consent, an international mechanism will have to be found to deal with the refugee issue.

On the most sensitive issue of Jerusalem — the Holy City that both sides claim as their capital — Bush said simply that the two sides will have to work it out.

But as Air Force One took off from the airport outside Tel Aviv on Friday, the intractable issues that have sunk so many previous peace-making attempts — settlements, security, borders, refugees, Jerusalem — looked no closer to being solved.

On settlements, for example, the Palestinians are demanding a complete halt to all activity in the occupied West Bank and annexed east Jerusalem.

But Israel's Prime Minister Ehud Olmert pledged not to build any new settlements or to expropriate more land, he made clear that “Jerusalem as far as we are concerned is not in the same status.” Even if the two sides agree a deal, both Abbas and Olmert would face an uphill battle in selling it to their respective publics.

The Israeli premier currently heads a coalition, two of whose members have threatened to quit if the two sides discuss core issues — a daunting possibility for a man who currently languishes at the bottom of opinion polls that predict right-wing parties would win a new general election.

And Abbas's authority extends only to the West Bank while Hamas continues to challenge him from the increasingly isolated Gaza Strip.—AFP