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A general view shows the Israel-Gaza border, as Palestinians walk around the Gaza side of the border, Israel April 8, 2018. REUTERS/Amir Cohen

(reuters_tickers)

By Matt Spetalnick, Steve Holland and Yara Bayoumy

WASHINGTON (Reuters) - The Trump administration has nearly completed a long-awaited Israeli-Palestinian peace plan but is still struggling to decide how and when to roll it out, a senior White House official said, acknowledging that Washington faces a “disconnect” with Palestinians over its planned U.S. embassy move to Jerusalem.

The initiative, which had been widely expected to be released earlier this year, now looks likely to remain on the shelf until its chief architects - President Donald Trump's son-in-law, Jared Kushner, and Middle East envoy Jason Greenblatt - finalise the details and determine the time is right to unveil it.

Their decision could depend on an array of obstacles, not least that one of the two sides in the decades-old conflict – the Palestinians – say they have lost faith in the Trump administration to act as a fair mediator and have boycotted the

process since last December’s Jerusalem announcement.

While offering few specifics for a plan that has drawn widespread scepticism even before its unveiling, the official confirmed it would not contain a U.S. commitment to a two-state solution, as the Palestinians had demanded. It will instead stick to Trump’s assertion that he will accept whatever the two sides agree.

The chill between the White House and Palestinians has affected the peace effort, the official acknowledged, speaking on condition of anonymity.

The "disconnect" with Palestinians over Jerusalem "is not a small blip," the official acknowledged in an interview with Reuters.

Most experts question whether Kushner and Greenblatt, both of whom had no prior diplomatic experience, can achieve any deal.

Pushing back against critics who say the plan is likely to be biased in favour of U.S. ally Israel, the official said both sides would find parts “they like and they hate.”

Among the still-unresolved questions is what the plan will propose for the future of Jerusalem, the official said, citing one of the most sensitive issues in a long history of failed U.S.-led peacemaking.

The official conceded this administration's efforts might fail too, saying: "It may not work for us either."

Trump, in a decision that incensed the Palestinians and aggravated Arab and Western allies, reversed decades of U.S. policy when he recognised Jerusalem as the capital of Israel and initiated the move of the U.S. embassy there from Tel Aviv in mid-May.

Israel considers all of Jerusalem – home to sites holy to Muslims, Jews and Christians - to be its capital, a claim not widely accepted internationally. The Palestinians want the city's eastern part as the capital of a future state.

“We are refining it,” the official said of a peace plan that Trump has boasted could reach the “ultimate deal.” “We are definitely still struggling on Jerusalem ... But we are very close to completing it.”

Other issues likely to complicate the rollout include the latest Israel-Gaza violence, Trump’s decision due next month on whether to abandon the Iran nuclear deal and the international tensions over a suspected chemical weapons attack in Syria.

While insisting the plan is progressing, the senior official said: "We’re going to look at all the surrounding circumstances and we’re going to decide” when to announce it.

Trump’s team has had back channel discussions with “regular” Palestinians but their leaders show no sign of returning to negotiations, the official said. The administration does not rule out going ahead with the rollout anyway.

The plan will propose detailed solutions to main disputes: borders, the future of Jewish settlements on occupied land, the fate of Palestinian refugees and security.

While Trump's new national security adviser, John Bolton, is a pro-Israel hawk who has criticized previous U.S. peace moves, the official said the Middle East team has already met with him and believe he will be supportive.

(Writing by Matt Spetalnick; Editing by Yara Bayoumy and Alistair Bell)

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Reuters