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"Palestinian President Mahmoud Abbas has proposed that the Obama administration negotiate the final borders of a Palestinian state with Israel, a Palestinian official said Wednesday, as a U.S. envoy headed to the region for another attempt to restart Mideast peace talks. Such a proxy arrangement could provide a way around the current deadlock over reviving Israeli-Palestinian talks, which broke off more than a year ago. Abbas says he won't return to the table without a complete Israeli settlement freeze, something Israeli Prime Minister Benjamin Netanyahu has refused to do. As an alternative, U.S. officials could replace Palestinian negotiators in border talks with Israel, said an Abbas aide, who spoke on condition of anonymity because he was not authorized to discuss the content of internal meetings. The U.S. negotiators would be given clear parameters, the aide said. Advertisement The state would have to be established in the territories Israel captured in the 1967 Mideast War - the West Bank, Gaza and east Jerusalem - but the Palestinians would agree to swap up to 3 percent of the territory to accommodate some Israeli settlements, the aide said. Abbas made the proposal in recent meetings with Egyptian officials who passed the idea along to Washington, the aide said. It was not clear how the Americans reacted. Officials at the U.S. Consulate in Jerusalem, which serves the West Bank, had no comment. Abbas has said much ground has been covered in his talks with Netanyahu's predecessor, Ehud Olmert, and that the time has come for decisions. In those talks, Abbas offered a swap of up to 1.9 percent of West Bank land for Israeli territory, while Olmert proposed 6.5 percent. Alternately, Abbas could resume negotiations with Netanyahu, provided the Israeli leader agrees to a six-month settlement freeze in the West Bank and east Jerusalem. Netanyahu would not have to announce the freeze, the aide said, presumably to avoid a rebellion in his hardline coalition. The

"VIENNA - Iran has formally responded to a nuclear fuel swap proposal backed by the world's major powers with a counteroffer effectively rejecting their demand that Tehran export most of the material it would need to make a warhead, diplomats said Tuesday. For months, Iranian officials have used the media to criticize the plan and offer alternatives to one of its main conditions - that the Islamic republic ship out most of its stock of enriched uranium and then wait for up to a year for its return in the form of fuel rods for its Tehran research reactor. While critical of such statements, the United States and its allies said they did not constitute a formal response to the plan, first drawn up in early October in a landmark meeting in Geneva between Iran and the six world powers, and then refined later that month in Vienna talks among Iran, the U.S., Russia and France. The diplomats told The Associated Press that Iran first submitted such a written formal response to the International Atomic Energy Agency earlier this month in a Jan. 6 meeting between Ali Asghar Soltanieh, Iran's chief representative to the IAEA, and agency chief Yukiya Amano. The IAEA-brokered talks in Vienna came up with a draft proposal that would take 70 percent of Iran's low-enriched uranium to reduce its stockpile of material that could be enriched to a higher level, and possibly be used to make nuclear weapons."

"Iran warned on Saturday the West has until the end of the month to accept Tehran's counterproposal to a U.N.-drafted plan on a nuclear exchange, or they will start producing nuclear fuel on their own. The warning from Foreign Minister Manouchehr Mottaki showed a hardening in Iran's stance over its controversial nuclear program. While the West fears it shows Iran has nuclear ambitions, Tehran insists the program is only for peaceful, electricity production purposes. The Iranian foreign minister's message was broadcast on Iranian TV. He says that Iran gave [the West] an ultimatum, and they have one month left, giving them to the end of January [to accept]. He adds that [the West] must choose between one of the two proposals [that Iran has made], which is either to purchase uranium [directly from France or Russia] or to swap it [on Iranian soil]. Otherwise, he insists that Iran will go ahead and produce [high grade] enriched uranium fuel using its own talented experts. Western powers, including the United States, have called on Tehran, under the draft U.N. nuclear deal worked out last November, to ship around 70 percent of its low-grade uranium abroad. That fuel would then be transformed into more highly enriched (20 percent grade) uranium and shipped back to Iran. Iran, however, came up with a counterproposal insisting that its uranium stockpile be sent abroad in small batches, in quick transfers on Iranian soil, preferably on Iran's own Kish Island. Iran's proposal is unacceptable to the West, because it allows Iran to keep significant quantities of enriched uranium to produce nuclear weapons. "

"Iranian media on Sunday reported Tehran will conduct a large-scale defensive military exercise next month, coinciding with what government officials now say is a deadline for the West to respond to its counteroffer to a nuclear-fuel deal. The commander of Iran's ground forces, Brig. Gen. Ahmad-Reza Pourdastan, said the drill will be conducted by Iran's army, in conjunction with some units of the Islamic Revolutionary Guard Corps, to improve "defensive capabilities," Press TV, the English-language, state-run media outlet reported. The report follows comments by Iran's foreign minister Manouchehr Mottaki on Saturday, challenging Western nations to decide by the end of the month on counterproposals Tehran has floated to an internationally brokered nuclear-fuel deal. In the counterproposals, Iran has said it would agree to swap the bulk of its low-enriched uranium for higher enriched uranium, but in small batches and on Iranian soil."