One of the major stumbling blocks is the tax on Vatican land assets in Israel. Sources in Israel say the Church is seeking ex-territorial status for these sites, a request to which Israel is vehemently opposed.

Church sources say that Israel is unwilling to grant this status, which the Holy See customarily receives (in the U.S., for example).

The foot-dragging ended only after U.S. President George W. Bush broached the subject with Prime Minister Ariel Sharon at their last meeting. According to one source, Bush even raised the issue twice.

"Why can't you complete the negotiations?" Bush reportedly asked, after which Sharon ordered that the issue be handled urgently.

Colin Powell also discussed the subject in talks he held in Israel during his tenure as U.S. secretary of state. Even prior to the Bush administration, several U.S. senators had approached Israeli officials on the matter, including diplomats at Israel's embassy in Washington. Currently, the negotiations are stuck on the final article of the agreement between the two sides.

In his meeting with the Pope, Katsav explained that Israel has already made many concessions, and asked that the Vatican demonstrate some flexibility as well. Israel is also acting through various channels in an attempt to convince the U.S. government that it has already done all it can for the Vatican, and the pressure on it should be lifted.

The deputy director-general of the Foreign Ministry, Nimrod Barkan, has met with several Church officials to discuss this issue during his trip to the U.S. this week. On Friday, he will meet activists in the Jewish community, some of whom are involved in a religious dialogue with the Catholic Church.

Barkan said during meetings in the U.S. this week that the American Catholic public is being fed biased information about the Vatican's negotiations with Israel, and is unaware of the full extent of the concessions Israel has made.

"Our goal is to see this matter resolved," says David Allcot of the American Jewish Committee.

The Bush administration has been courting Catholic favor for quite some time (Bush's last two appointments to the U.S. Supreme Court are both Catholics), and has acquiesced to Vatican requests on various matters in order to further cement their relationship.

Furthermore, the negotiations between Israel and the Vatican involve very senior U.S. officials, as the Bush administration is keen to end the affair. The American officials are also in touch with Israeli officials conducting the talks with the Holy See.

Several years ago, the Americans intervened successfully on the Vatican's behalf to prevent the construction of a mosque next to the Church of Annunciation in Nazareth.

Church leader David Yaeger said at the time that the Israeli government only wakes up when it comes under pressure from the Americans.