November 11, 2010 - 1:00am

NEW YORK, Nov 11 (Reuters) - U.S. Secretary of State Hillary Clinton assured Israeli Prime Minister Benjamin Netanyahu on Thursday that Israel's security requirements would be fully taken into account in any peace deal with the Palestinians.
In a move that could allow Netanyahu to persuade his governing coalition to back a new freeze on Israeli settlement construction, Clinton and the visiting Israeli leader ended a marathon round of talks in New York with a strong declaration of Washington's "unshakable commitment to Israel's security and to peace in the region."
"The prime minister and the secretary agreed on the importance of continuing direct negotiations to achieve our goals," the two sides said in a joint statement, which did not mention the settlement issue directly.
But Clinton repeated that the peace talks -- which have hit an impasse over the settlement issue -- could yet yield an independent Palestine living next to Israel "with secure and recognized borders that reflect subsequent developments and meet Israeli security requirements."
"Those requirements will be fully taken into account in any future peace agreement," the joint statement said.
It added that any future Palestinian state should be based on its 1967 borders with "agreed swaps" of territory, holding out the prospect that Israel might retain some of the occupied West Bank in exchange for giving the Palestinians other Israeli territory.
Israeli officials said Netanyahu, who faces a tough political sell within his own coalition on the settlement issue, has pushed Clinton for broad new U.S.-Israel understandings on Israel's security needs in any eventual peace agreement.
"The chances of reaching a peace agreement will be improved significantly by achieving comprehensive security understandings between Israel and the United States," Netanyahu said before Thursday's talks began.
Israel wants a long-term military presence in the Jordan Valley along the eastern border of a future Palestinian state as well as financial help to pay for security arrangements that would be necessary if a peace deal is achieved.
U.S. officials said Clinton and Netanyahu met over a seven-hour period in New York, including one-on-one meetings and broader discussions which involved other U.S. officials including Middle East peace envoy George Mitchell and National Security Council Middle East specialist Dan Shapiro.
Thursday's talks marked the Obama administration's latest attempt to restart the direct peace talks that began in Washington on Sept. 2 but were suspended by the Palestinians three weeks later when Netanyahu refused to extend a 10-month limited building freeze in West Bank settlements.
The deadlock over settlements appeared to deepen this week when Israel announced it was going to proceed with a new housing project in part of the West Bank that it annexed to Jerusalem 43 years ago, underscoring Palestinian fears that Netanyahu's government will push ahead with settlements regardless of the impact on the peace process.
Clinton, who on Wednesday said the Israeli decision on settlement building was counterproductive, said she still believed that Netanyahu and Palestinian President Mahmoud Abbas were serious about the talks.
"The prime minister and President Abbas are both very committed to a two-state solution. And we are going to find a way forward," she said before the meeting with Netanyahu.
Netanyahu, whose governing coalition is dominated by pro-settler parties, has thus far resisted calls for a freeze on settlement construction.
Political analysts have suggested that new U.S. security commitments could help him persuade his coalition to reinstate the temporary moratorium on construction, which would allow the talks to resume.
With the peace process in limbo, the Palestinians have stepped up calls for the international community to recognize Palestinian statehood now -- a move the United States fears could further complicate the situation.
Abbas said on Thursday the Palestinians would have to consider alternatives to the peace process given the expansion of settlements on land that the Palestinians hope will eventually become their state.
"They (the Israelis) are undertaking unilateral actions every day," Abbas said in the West Bank city of Ramallah.


American Task Force on Palestine - 1634 Eye St. NW, Suite 725, Washington DC 20006 - Telephone: 202-262-0017