Israeli and Palestinian leaders will meet Thursday in a bid to advance the Middle East peace process. But as Robert Berger reports from VOA's Jerusalem bureau, expectations are low.

Israeli Prime Minister Ehud Olmert and Palestinian President Mahmoud Abbas will try to resolve a crisis over Jewish-settlement expansion when they meet Thursday in Jerusalem. The dispute has soured the atmosphere just a month after the Annapolis conference in the United States, where both sides agreed to resume peace talks after a seven-year break.

The Palestinians are furious over Israeli plans to build more than 300 new homes in the Jewish neighborhood of Har Homa in disputed East Jerusalem. The neighborhood is built on land the Palestinians claim for the capital of a future state.

Palestinian legislator Hanan Ashrawi says Israel is ignoring the internationally-backed "road map" peace plan, on which the negotiations are based.

"Israel certainly did not comply with the road map, and did not promise any kind of concrete action consistent with the road map like cessation of settlement activities, and so there was a tremendous sense of letdown among the Palestinians," she said.

Israeli spokesman Mark Regev says the road map does not apply to Jerusalem, which is the capital of the Jewish state. He insists that Israel is complying with three key principles of the plan.

"One, no new settlements; two, no outward expansion, outward growth of existing settlements; three, no special subsidies or support for settlers. I think that is a package that shows how serious we are in trying to move forward with the Palestinians," he said.

The settlement dispute has dashed hopes of reaching the goal set at Annapolis: a final peace agreement by the end of next year. A new poll shows only eight percent of Israelis and 23 percent of Palestinians believe that is possible.