Israel may hand over settlements, says Sharon

ISRAEL will hand over some Jewish settlements for peace, but the Palestinians must give up their demand that refugees be allowed to return to their former homes in Israel, Prime Minister Ariel Sharon said in an interview.

In a broad interview with the Israeli newspaper Haaretz, Sharon said he believes the US-led war on Iraq has shaken up the MidEast and may open the door to new opportunities for negotiations.

A hardliner who played a key role in building Jewish settlements in the West Bank and Gaza Strip, Sharon outlined his reservations with the so-called US-backed road map to Palestinian statehood.

An Israeli delegation headed by Dov Weisglass, DG of Sharon's office, headed to the US on Saturday to present 15 Israeli reservations with the plan.

The plan envisions Palestinian statehood by 2005 and is backed by the quartet of MidEast mediators the US, the EU, the UN and Russia.

Whether peace is reached depends on the Palestinians, said Sharon, adding they must first change their leadership and fight terrorism.

Viewed by Israel as a moderate, Mahmoud Abbas, the Palestinian prime minister-designate, could be the key to a possible peace deal, he said.

Palestinian cabinet minister Saeb Erekat said Israel's attempt to change the road map was meant to sabotage the project. "It's another way for the Israeli government to say it is rejecting the road map," he said.

Sharon said Israel's main concerns with the road map are security-related, but he gave no details, saying only the differences were in wording.