The United States told Israel last week that Gulf states Oman and Qatar are willing to renew their relations with Israel if it agrees to a moratorium on construction in the West Bank, Haaretz has learned.

The Obama administration has been pushing for a construction freeze in the West Bank settlements, which are illegal under international law. President Barack Obama's demand has been repeatedly rejected by Israel's government under Prime Minister Benjamin Netanyahu. Palestinian President Mahmoud Abbas has refused to resume negotiations until Israel complies with a freeze.

As reported by Haaretz, Washington had proposed a one-year freeze to Netanyahu as a way to persuade Arab states to move toward normalizing ties with Israel. Haaretz has learned that the proposal was made by U.S. Middle East envoy George Mitchell in talks with Netanyahu, although the prime minister's spokesman dismisses this as "mere media speculation."

Mitchell and Netanyahu are scheduled to next meet on August 26 in London. Sources say that Netanyahu is seeking to reach an agreement with the Americans on the issue by the UN General Assembly meeting on September 22 in New York. He would give his answer to Obama then.

An Israeli diplomat told Haaretz that Oman and Qatar's reported readiness to renew relations is currently the biggest success the Americans have had in proving to Israel that a moratorium would improve ties with Arab nations.

The Obama administration has been pushing Saudi Arabia to make a gesture toward Israel - commercial forays, academic exchanges or overflight rights - in exchange for a settlements freeze.

Middle East experts say Saudi Arabia, which is calling most of the shots on Arab diplomacy toward Israel, would be very wary about rewarding Israel for anything short of a final peace deal with the Palestinians.

Israel's embassy in Oman was shut down in 2001 after the outbreak of the second intifada. Qatar had an Israeli delegation office, which was also shut down. The diplomats were told to leave due to Israel's three-week Gaza offensive that began last December.

In July, Bahrain's crown prince wrote an opinion piece for The Washington Post that criticized Arabs for not communicating to the Israeli people their commitment to a peace deal.

Earlier this month Haaretz reported that the Americans are willing to allow most projects currently under construction in the West Bank to continue if future construction is put on hold for 12 months. Israeli and U.S. sources said the parties were "close to reaching a deal."