New York (CNN) -- U.S. officials and diplomatic sources say Mideast peace envoy George Mitchell is working with Israelis and Palestinians on a formula for settlements before the moratorium on building in the West Bank expires at the end of the month.
Nobody expects the best case scenerio, which would be for Israeli Prime Minister Benjamin Netanyahu to sign off on a blanket extention of the agreement. But they also don't expect the worst: settlement construction to resume full throttle, causing Palestinian President Mahmoud Abbas to walk out of peace talks.
In between the black and white, the United States is looking for a shade of gray that will satisfy each leader's political considerations. Netanyahu needs something to show his cabinet that some continued restraint on settlement activity is worth it. And in order to justifying stay at the table, Abbas needs assurance Netanyahu is serious about the talks.
Several ideas are being discussed. For example Netanyahu could go along with some sort of deal on settlements for an acknowledgement by Abbas the talks will eventually recognize Israel as the home of the Jewish people. Abbas might be satisfied with some additional control in the West Bank for his Palestinian security forces.
The problem, U.S. officials and diplomatic sources say, is neither side has admitted its bottom line. That leaves Mitchel in a race against the clock to come up with the right set of "confidence-building measures" to keep the leaders talking. And those negotiations are likely to come down to the wire.