Israel has raised the idea of transferring parts of the territory in “the triangle” southeast of Haifa — along with the hundreds of thousands of Israeli-Arab citizens who live there — to a future Palestinian state in return for annexing West Bank territory including settlement blocs, Maariv reported on Wednesday.

The idea is not central to the formal talks being brokered by US Secretary of State John Kerry, who is due back in Israel on Thursday pushing a “framework” peace agreement. But it has been discussed “at the highest levels” between Israel and the US, the report said.

The area known as “the triangle,” located in the Sharon plain, contains mostly Arab-populated towns and cities such as Kafr Qara, Umm al-Fahm, Tayibe and Qalansawe. It was to have come under Jordanian rule in the arrangements that saw the establishment of the State of Israel but was ultimately included in Israeli sovereign territory under the 1949 armistice agreements because of Israeli security demands, and instead Israel ceded territory that had been earmarked for Israeli sovereignty in the area of the southern Hebron hills.

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Unnamed sources told Maariv that the “triangle” plan has come up during talks between Israel and US officials at various levels, including at least one occasion when very senior officials including Kerry were in attendance. Israeli legal officials have begun investigating legal aspects of such an arrangement, the newspaper said. It added that the Americans have apparently not assented to the idea, and that the Palestinians are likely to reject it.

The idea is aimed at addressing two central issues in a possible peace agreement: first, land swaps between Israel and a Palestinian state that would enable Israel to expand its sovereignty to encompass major West Bank settlements, while compensating the Palestinians with territory that is currently part of sovereign Israel; and second, preserving Israel’s Jewish majority.

The possibility of land swaps between Israel and the Palestinians has gained widespread backing in the international community, but Prime Minister Benjamin Netanyahu is making stiffer territorial demands than some of his prime ministerial predecessors, the report said, including refusing to give away as much as he receives. In other words, whereas former prime minister Ehud Olmert was prepared to trade land on a one-to-one basis, Netanyahu is apparently pushing for a better formulation from Israel’s point of view.

Palestinian Authority President Mahmoud Abbas has been widely reported to seek only very minimal land-swap border adjustments, whereas Netanyahu seeks to ensure that as many Israelis living beyond the Green Line as possible be brought under undisputed Israeli sovereignty under a permanent accord.

Netanyahu is also concerned about Israel’s available land reserves being sufficient to meet its growing population demands, the report said. In addition, the prime minister is worried that even after signing a peace agreement, the Palestinians won’t genuinely be reconciled to ending their conflict with Israel, and will hope instead that Israel’s Arab population, whose growth rate is higher than the Jewish population, can eventually bring about a binational state in today’s Israel alongside the new Palestinian state.

There are currently around 1.6 million Israeli Arabs in the country and Maariv estimated that transferring 300,000 of those residents to a Palestinian state would leave Israel’s Arab population at around 12%.

By drawing on land from the triangle, where two of Israel’s largest Arab towns, Tayibe and Umm al-Fahm are located, Israel would be able to offer the Palestinians more territorial compensation in order to annex more West Bank settlement areas, the report said.

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The idea of swapping territory including the residents who live on it has been discussed for years in some Israeli political circles. Foreign Minister Avigdor Liberman has long argued that it would be a mistake, and inequitable, for Israel to relinquish unpopulated Israeli territory to the Palestinians in exchange for annexing settler-populated territory in the West Bank. Maariv noted that Liberman consistently raises his proposals in contacts with American and European interlocutors, and that he recently held talks on the peace process with Kerry in Washington.

In the formal peace talks with the Palestinians, the report went on, Israel has told the Palestinians which territory it seeks to annex in the West Bank under any future accord, but has not detailed how it would be willing to compensate the Palestinians. Justice Minister Tzipi Livni, leading those talks, has asked the Palestinians what they want in return.

Aside from the land issue another major sticking point in the negotiations is Netanyahu’s demand, even after the establishment of a Palestinian state, to maintain IDF forces in the Jordan Valley and full control over the border between the West Bank and Jordan. Israel insists on control there out of security concerns, while the Palestinians emphatically reject any Israeli presence on the territory of a future state.

Palestinian Authority Prime Minister Rami Hamdallah told Maariv that, from his point of view, there was nothing to discuss over the matter. “We are talking about a clear message to Israel and the US: The Jordan Valley is Palestinian,” he said.

Hamdallah also made clear that, despite repeated assertions by chief PA negotiator Saeb Erekat that there was no point in continuing talks, the Palestinians would see through the nine-month negotiating period agreed with Kerry. “We committed to the Americans to hold talks until April and we will keep that commitment,” he said.

Kerry is due to arrive in the region on Thursday for his tenth visit this year, to try to push for a framework agreement that, while not a signed document, would address all core issues, including the borders between Israel and a future Palestine; security; Palestinian refugees; and conflicting claims to the holy city of Jerusalem. The framework deal reportedly includes clauses providing for Israeli readiness under certain conditions to partner the Palestinians to a state based on the pre-1967 lines with land swaps, and for the Palestinians to recognize Israel as a Jewish state and declare an end to the conflict.

Kerry reportedly hopes to have the sides agree in the course of January to proceed on the basis of the framework deal, and to extend the negotiating period beyond April.