Egypt turmoil holds up Israel-Palestinian talks

For Israel, Mubarak's departure has left behind an all-consuming worry that the influence of Islamic extremists will grow, and the two countries' historic 1979 peace treaty could be in jeopardy. For the Western-backed Palestinian leadership, the fall of Egypt's strongman deprives them of a key mediator with the Israelis and - just as crucially - with their Palestinian rivals in the militant Islamic Hamas movement.

Both sides are now waiting to see what kind of Egyptian government emerges in Mubarak's wake. It's one more distraction preventing Israelis and Palestinians from reviving a U.S.-backed peace push that ground to a halt only weeks after it started last year.

The Palestinians were already reeling from last month's leaks to Al Jazeera TV disclosing that they had offered deep concessions to Israel in past peace talks. The revelations triggered public outrage. Hoping to diffuse the anger on the street, the Palestinians are now focused on moving ahead with long-delayed elections.

In a step to prepare for fall elections called in response to the Egypt turmoil, Palestinian Prime Minister Salam Fayyad and his Cabinet plan to resign today, a Palestinian official said. Fayyad will form a new Cabinet with more officials from President Mahmoud Abbas' Fatah Party to give them a boost against Hamas rivals, the official said, speaking on condition of anonymity.

Obama made Middle East peace a top priority upon taking office two years ago, believing that resolving the Israeli-Palestinian conflict would remove a major source of tension in the region. He personally presided over the relaunch of peace talks at the White House last September, pledging to forge an agreement within one year.

The talks broke down just three weeks later with the expiration of an Israeli slowdown on settlement construction, and Obama's September target for an agreement has since appeared increasingly unrealistic. The Palestinians say there can be no good-faith negotiations if Israel continues to build settlements on the occupied lands they claim for a future independent state.

In the absence of peace talks, presidential aide Yasser Abed Rabbo said the Palestinians would spend the coming months preparing for the elections, pursuing reconciliation and trying to rally international support for Palestinian independence at the United Nations. They have set September as an informal target date for declaring statehood.

For Israel, the reluctance to resume talks is far more straightforward. Mubarak's downfall has robbed Israel of a key ally and raised concerns that the radical Muslim Brotherhood could play a role in a future Egyptian government. The Egyptian army's pledge on Saturday to preserve a bedrock peace treaty with Israel helped ease fears.

At a time of such great uncertainty, Israeli officials are highly reluctant to turn over full control of territory on their doorstep to Abbas, a man they view as well-intentioned but weak.

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