by Dave Bender JERUSALEM, July 5 (Xinhua) -- Israeli Defense Minister Ehud Barak and Palestinian Prime Minister Salam Fayyad met in Jerusalem on Monday, discussing "avenues for advancing the diplomatic process between the two sides." The closed session comes a day before a planned meeting between Israeli Prime Minister Benjamin Netanyahu and U.S. President Barack Obama. The two touched on security issues and economic coordination projects, and discussed preparations for easing Israel's blockade on the Hamas-ruled Gaza, the Defense Ministry said in a statement after the meeting. The two agreed to continue their direct discussions, and maintain a direct link between the defense ministry and Fayyad's office, "in order to increase coordination and provide a response on issues that require direct and rapid contact between the sides, " the statement said. Barak, referring to the upcoming meeting between Netanyahu and Obama, said "Israel must grab that bull by the horns." Speaking earlier in the day at a meeting of the Knesset (Israeli Parliament) Foreign Affairs and Defense Committee, Barak said Israel needed to present the U.S. with a "clear initiative" over borders, one that allowed settlement blocs in the Jordan Valley to remain a part of Israel. This would ensure, in his words, "a solid Jewish majority for generations," according to the Israeli Ha'aretz daily newspaper. Barak said the plan should "enable the establishment of an independent and demilitarized Palestinian state." Sources close to the prime minister, meanwhile, told Xinhua that they don't think Obama will ask Netanyahu to extend the self- imposed 10-month moratorium over settlement construction. "The freeze is due to end in September, and it is unlikely that the U.S. president will demand that Netanyahu announce an extension to the construction freeze in the West Bank for now," a senior official at the prime minister's office said. Netanyahu, who has called for direct negotiations with the Palestinian National Authority (PNA), said he thinks holding indirect proximity talks, while enabling the parties to maintain a certain degree of communication, are unable to advance such substantive as borders, refugees, Jerusalem, and security arrangements, according to the source. The Israeli prime minister and Washington have both indicated they favor direct talks between the Middle East foes, but the Palestinians are less keen and are seeking assurances before agreeing to face-to-face talks. Among the Palestinian concerns is that Israel would fail to renew its West Bank settlement freeze in September. Netanyahu also plans to present Obama with a newly-revised list of products that will be prohibited entry into the Gaza Strip. Israel feels this is a significant policy change. The list previously included products that were allowed into Gaza. Now, the list only mentions products which Israel believes would pose a security risk. The meeting between Netanyahu and Obama was initially meant to take place last month, but Netanyahu had to call it off and return to Israel from Canada when news broke of the Gaza maritime convoy incident.