Palestinian Prime Minister Salam Fayyad and Israeli Defense Minister Ehud Barak will meet in the next few days, according to Barak. This will be the first publicly- acknowledged meeting between leaders from the two peoples since indirect talks were initially launched in March.

The announcement by Barak is the latest sign of a thaw in relations between the two and may suggest that face-to-face negotiations are around the corner.

However, there are still obstacles, with the Palestinians unhappy about potential house demolitions in eastern Jerusalem.

Subjects on table

Speaking on Wednesday, Barak made clear what he hopes to discuss when he meets Fayyad. First and foremost in Israeli minds is security. If Israel is to make any territorial compromise in a final peace deal, it has to be convinced that the Palestinian areas will not become what it terms "a launching pad for terror."

In recent years, the Americans have been helping to build confidence between various Palestinian and Israeli security services.

Israel is gradually handing control of parts of the West Bank to the Palestinians, and on the whole Israel has expressed satisfaction with the way the Palestinians have handled their new responsibilities. The Palestinian officers have received considerable training under U.S. instruction, with much of the work taking place on Jordanian soil.

Israel has been gradually reducing the number of its checkpoints throughout the West Bank. The Palestinians demand the free flow of people and goods and it is understood that Barak favors further relaxations.

While Barak's portfolio focuses on security issues, his meeting with Fayyad will have a broader brief.

Economic cooperation is likely to figure in the talks. While the Gazan economy remains shaky at best, things are looking up for residents of the West Bank. As the area is relatively calm, economic growth has been a boon. The West Bank's economy grew at some six percent in 2009, according to figures form the Palestinian Bureau of Statistics.

Barak also wants to raise the issue of Palestinian education. Israel is concerned that young Palestinians should be taught about Israel in a negative light, and the material should incite them against the Jewish state.

The other key topic for Barak is Palestinian campaigning against Israel in the international arena. Israel believes the Palestinians are not creating a positive atmosphere with their calls for boycotts of Israel and their attempts to have Israel censured in international organizations.

When announcing the upcoming meeting with Fayyad, Barak did add that he is sure the Palestinians will have their own demands and claims and he hoped they too would be addressed when he sits with the Palestinian prime minister.