United States President Barack Obama is slated to host Israel's Prime Minister Benjamin Netanyahu in Washington on Tuesday. The leaders are expected to discuss the Palestinian and Iranian issues.

Analysts do not expect too much to come out of the talks.

The meeting was initially meant to take place last month, but Netanyahu had to call it off and return to Israel from Canada when news broke of the Gaza maritime convoy incident. Israeli commandoes boarded a Turkish ship that was attempting to break the Israeli marine blockade of Gaza, with nine people losing their lives in the ensuing melee.

New proposal reported

The meeting will take place in the wake of reports on Sunday suggesting Palestinian President Mahmoud Abbas has proposed a peace agreement that would include a land exchange with Israel that would see the transfer of 2.3 percent of the West Bank into sovereign Israel, with similar land being handed over to the Palestinians to comprise part of their future state.

The report in the London-based Arabic daily Al Hayat suggested that the Palestinians would allow Israel to retain certain suburbs close to Jerusalem and also control of the hills close to the country's Ben-Gurion International Airport.

Abbas is also reportedly prepared to allow Israel to retain control of the Jewish quarter of Jerusalem's Old City with the Palestinians running the remainder of the famous landmark but guaranteeing access to all of its quarters for everyone.

The current international thinking is that the Old City be run by a group of nations, possibly including the U.S. and Saudi Arabia.

Within hours of the publication of the Al-Hayat report, Palestinian spokesmen were denying its veracity. However, there do seem to be increasing signs that Abbas has sent some indication to Netanyahu of his intentions regarding a final settlement.

It is understood that these messages have been relayed by U.S. envoy George Mitchell who is chairing indirect talks between the Palestinian and Israeli leaders.

Netanyahu and Washington have both indicated they favor an early commencement of a direct parley but the Palestinians are less keen and are seeking assurances before agreeing to face-to- face talks. Among the Palestinian concerns is that come September Israel will fail to renew its freeze on construction in settlements in the West Bank.