Israel rejects US plea to halt settlement building

'Natural growth' will continue, says official

President Barack Obama last night stepped up the pressure on Israel by declaring that the Jewish state must "stop" its settlements, even after it had rejected a demand from Hillary Clinton, the Secretary of State, for a comprehensive settlements freeze.

Speaking after an Oval Office meeting with the Palestinian leader Mahmoud Abbas, Mr Obama said Israel had an obligation of halting the settlement programme, which both he and Mr Abbas say is an essential pre-condition for a meaningful resumption of talks about a Middle East peace agreement.

But the already slim prospects of a breakthrough were dealt a severe new blow yesterday as Israel bluntly rejected the call, only hours before yesterday's White House meeting. Speaking in Jerusalem, Mark Regev, the Israeli government spokesman, said the internal or so-called "natural growth" of settlements would continue, and their fate would only be decided as part of the final negotiations for an overall peace agreement.

Israel's stance is fresh evidence of the tensions between the new administration in Washington and the government of the hard-line Prime Minister Benjamin Netanyahu, who is not only reluctant to rein back settlements but who refused to endorse even the concept of a two-state solution that had been embraced by his most recent predecessors. Mr Obama nonetheless reiterated his belief that Israel would come to realise such an arrangement was in its national interest.

The Israeli reaction will also dampen hopes surrounding the major speech Mr Obama is due to deliver in Cairo next week to the Arab and Islamic world. Although White House officials say the address will not set out a detailed new blueprint for Middle East peace, it cannot but touch upon a conflict that has defied solution for more than 60 years.

The talks with Mr Abbas were the third key meeting between Mr Obama and regional leaders, after discussions here with King Abdullah of Jordan and Mr Netanyahu, and before meetings in the Middle East next week with the leaders of Egypt and Saudi Arabia.

In its latest effort to break the Palestinian logjam, the Arab side is pressing a new version of the 2002 Saudi plan that offered normalised relations between the Arab world and Israel, in exchange for the return of land seized in the 1967 war. Under this scenario, Syria, Lebanon and other countries would be participants in negotiations, alongside the Palestinians.

But even before the latest confrontation over settlements, the chances of progress on that front seemed slender, given Mr Netanyahu's unwillingness to cede territory, and his reluctance to sign on to a two-state solution.

Relations between Jerusalem and Washington are now edgier than at any time since 1991, when the first President Bush refused to grant housing loan guarantees to the then Israeli government of Yitzhak Shamir, in an earlier attempt to stop settlement building.

Ms Clinton's words on the subject could not have been more explicit. Mr Obama, she said after talks with her Egyptian counterpart, "wants to see a stop to settlements – not some settlements, not outposts, not 'natural growth' exceptions." The US had communicated its position "very clearly... and we intend to press that point."

This insistence by the US is a further sign of Mr Obama's broad sympathy for the cause represented by Mr Abbas. But the political realities here and in the Middle East are far less simple.

It is far from clear how far Congress, traditionally supportive of Israel, will go along with the tougher line from the White House. Meanwhile Mr Abbas remains in a very weak position, having lost control of Gaza to Hamas, which does not officially accept Israel's right to exist, and having failed to prevent Israel from tightening its security grip on the West Bank, of which he is in charge.

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