by Dave Bender JERUSALEM, May 2 (Xinhua) -- As Israeli Prime Minister Benjamin Netanyahu and Egyptian President Hosni Mubarak are set to meet in Sharm el-Sheikh on Monday, Israelis and Palestinians are grappling over what restarting talks actually means. 'We're talking about a complex decision,' Netanyahu spoke on Saturday night of the Arab League (AL) foreign ministers' call that day in the Egyptian capital suggesting the Palestinians renew negotiations. However, Netanyahu cautioned, 'Israel still awaits the official Palestinian announcement of their willingness to begin talks.' Israeli President Shimon Peres on Sunday morning said ' proximity talks are clearly both necessary and within Israeli interests -- Israel wants an independent, successful and affluent Palestinian state,' who made the comment during a meeting with Denmark's foreign minister. Direct peace talks between Israel and the Palestinians came to a halt in late 2008 with Israel's Cast Lead incursion into the Gaza Strip, and have not resumed since. U.S. Secretary of State Hillary Clinton said last week that negotiations would begin this week, and Israel hopes that Egypt will help get the Palestinians to re-engage with Israel. U.S. envoy George Mitchell is expected to arrive in the region this week, as well. The AL on Saturday said in a statement it endorsed a resumption of indirect peace talks between the Palestinians and Israel while stressing a four-month deadline. 'I believe there will be good talks, with American and Egyptian intervention,' an Israeli government minister from the left-wing Labor Party told Xinhua. Palestinian leaders did not appear to share Israel's apparent enthusiasm towards prospective talks. 'I do not want to lose hope, and prefer to remain hopeful even though I detect many hurdles and despite the sense that in Israel there are people uninterested in peace. We still must try to walk this path until we find it,' Palestinian National Authority (PNA) President Mahmoud Abbas told a West Bank newspaper on Saturday. 'If Israel builds one house in the West Bank, Palestinians will immediately stop the negotiations,' chief Palestinian negotiator Saeb Erekat was quoted by Israeli news service Ynet as saying. A spokesperson in Erekat's office said Sunday afternoon that the Palestinian demand to halt Israeli construction also included East Jerusalem. Hamas' Damascus-based leadership, meanwhile, slammed the prospect of renewed negotiations, saying in a statement Sunday that talks would serve Israel as a 'new umbrella for it to commit more crimes and violations against the Palestinian people.' Netanyahu's remarks on Saturday came in response to a demand by Abbas that Israel freeze construction in East Jerusalem, announce an extension of the existing 10-month building freeze in the West Bank last September, and -- under a condition very unlikely to be accepted by Israel -- that Israel transfer the Jordan Valley and areas in the West Bank currently under full and partial Israeli control to the Palestinians in any final-statue agreement, according to Israel Army radio. 'This is the security belt of the State of Israel,' a Jordan valley official was quoted as saying by an Israeli news site. Israel considers the sparsely- populated Jordan Valley region a buffer against a mechanized military assault from the east. Economic concerns could also stand in the way. Danny Ayalon, Israel's Deputy Foreign Minister, said Sunday that recent Palestinian boycotts of Israeli foodstuffs and products produced in West Bank settlements could also damage prospects for talks. 'If the boycott continues, it may damage the progress of the talks and the foundation of trust between us,' Ayalon told the Knesset, Israel's parliament. In April, Palestinian Minister of Economy Hasan Abu-Libdeh said that all goods produced in West Banks settlements would be boycotted by the PNA. The PNA on Sunday slammed the Israeli threats over its decision to outlaw products of Israeli settlements in the West Bank markets. Ghassn al-Khatib, spokesman of the Palestinian government, told Xinhua that linking the talks with barring the settlement products was just 'an Israeli excuse.' 