Israelis and Palestinians 'on Verge of Gaza Deal'

The US secretary of state, Condoleezza Rice, said today that an agreement was close on allowing Palestinians freedom of movement in the Gaza Strip.

Ms Rice said there was an "agreement in sight" after holding separate talks with the Israeli and Palestinian leaders.

The two countries have failed to sign a deal on movement across borders since Israel pulled out of the Gaza Strip in September, withdrawing more than 8,000 settlers and army forces after 38 years of occupation.

"It is very important for ordinary Palestinians ... that there be freedom of movement established between Gaza and the West Bank," Ms Rice said.

The Palestinian president, Mahmoud Abbas, said an agreement would soon be signed, but added that final details were still being worked out.

"I think that we are able to put all these ideas together and finalise them soon," he said. "We are on the verge of reaching an agreement on this issue."

Freedom of movement across the borders would allow the Palestinians to revive their ailing economy by reaching export markets in Europe.

One of the major sticking points to a deal has been Israeli monitoring of the Rafah border terminal between the Gaza Strip and Egypt. Both sides have already agreed to EU observers.

However, Israel has also asked for a video link enabling it to see Palestinians crossing the border - a proposal that has been vehemently opposed.

Palestinian officials told Reuters an agreement on Rafah would be announced later today.