Israeli and Palestinian leaders held a summit meeting today in Jerusalem in a bid to advance the Middle East peace process. As Robert Berger reports from VOA's Jerusalem bureau, the talks were overshadowed by a dispute over Jewish settlement construction.

Israeli Prime Minister Ehud Olmert (R) shakes hands with Palestinian President Mahmoud Abbas during a meeting in Jerusalem, 27 Dec 2007

Israeli Prime Minister Ehud Olmert and Palestinian President Mahmoud Abbas held their first meeting since they agreed to resume peace talks at the Annapolis Conference in the United States a month ago. The summit took place in a sour atmosphere, after Israel decided to build more than 300 homes in the Jewish neighborhood of Har Homa in disputed East Jerusalem. The neighborhood is built on land the Palestinians claim for a future state.

Palestinian negotiator Saeb Erekat says the construction violates the internationally-backed "roadmap" peace plan on which the negotiations are based.

"The main point is we're urging the Israeli side to stop all settlement activities including natural growth, in order to give peace the chance it deserves," he said.

Israel says the roadmap does not apply to the Jewish neighborhoods of East Jerusalem because they will remain a part of the country in any final peace agreement.

"And obviously when we have these meetings, the Palestinian side brings its concerns to the table, we bring our concerns to the table and the idea is to try to find common ground," said Israeli spokesman Mark Regev.

But there is little common ground on the settlement issue. The dispute underscores how hard it will be to achieve the goal of Annapolis: a final peace agreement by the end of next year.