Netanyahu urges Jewish settlers not to provoke collapse of peace talks

Israeli premier resists US pressure while preparing right wing for compromise. Donald Macintyre reports from Jerusalem

Israel's Prime Minister, Benjamin Netanyahu, appealed early today to the Palestinian leadership to continue direct negotiations for a peace deal despite his refusal to prevent the resumption of Jewish settlement construction in the West Bank.

The midnight deadline set for an end to the partial freeze on settlement building passed amid last ditch international attempts to broker a compromise between Israel and a Palestinian leadership demanding that the ten month moratorium be prolonged.

In a clear message to settlers and the Israeli political hard right, Mr Netanyahu had earlier called on "the residents in Judea and Samaria [the West Bank] and the political parties to show restraint and responsibility today and in the future" as it had during the moratorium.

That statement from the Prime Minister's Office was apparently designed to avert triumphalist celebrations by settlers of the end of the freeze that might further endanger the talks – and possibly to prepare the ground for limited and undeclared restrictions on settlement building in the months ahead.

As the deadline passed last night without Mr Netanyhau accepting Washington's urgings to extend the moratorium, the Israeli Prime Minister promised "continued contacts" over the coming days to salvage "expedited, honest" talks between the two sides.

Mahmoud Abbas, the Palestinian President, who had originally threatened to pull out of the talks if the moratorium was not extended, was expected to stay his hand pending consultations with his Fatah faction, the Palestinian Liberation Organisation executive, and the Arab League, over the next week on how to respond to the end of the settlement freeze. The leftist Popular Front for the Liberation of Palestine suspended its membership in the PLO yesterday to signify its disapproval of negotiations without a freeze.

Dr Sabri Saidam, a senior aide to Mr Abbas and deputy secretary general of the Fatah Revolutionary Council, confirmed the plan for consultations yesterday and said Mr Abbas would be reporting the deadlock to the 4 October meeting of the "follow up committee" of the Arab League, representing Arab States – the body which sanctioned Mr Abbas's entry into direct negotiations in the first place. Dr Saidam said he expected talks with Israel to be put on hold while the consultations continued.

David Axelrod, one of Mr Obama's close aides, said on an ABC Sunday talk show: "We think this [the talks] is an unparalleled opportunity and a rare one, and we have to seize the advantage of that, and we are going to urge and push throughout this day to get some kind of resolution."

In a BBC interview before returning to Israel from the US, where has been in intensive talks to resolve the crisis, the Israeli Defence Minister, Ehud Barak, said: "The chance of achieving a mutually agreed understanding about a moratorium is 50-50. The chances of having a peace process is much higher."

Mr Barak – who leads Mr Netanyahu's coalition partner, the Labor Party – is widely thought to have been in favour of prolonging the partial freeze with some support from the Deputy Prime Minister, Dan Meridor, who had proposed extending it in those settlements that Israel would not hope to retain in any final status agreement with the Palestinians. But they are outnumbered by the hawks in Mr Netanyahu's inner cabinet, including Moshe Yaalon, Benny Begin, Avigdor Lieberman, and Eli Yishai, the leader of Shas, the ultra-orthodox party, who did not attend the ministerial meeting which authorised the moratorium in the first place.

In response to Mr Netanyahu's call for restraint, Danny Dayan, the chairman of the Yesha Council, the main umbrella body for settlers, said it was "more important to get back to work than to celebrate". The moratorium had been "of benefit to no one," he said. "It's like a film. You press pause and then you press play. It doesn't make it any more dramatic when you resume where you left off."

Meanwhile, a British ship with 10 passengers, all Jews, from Britain, the US, Israel and Germany, set out for Gaza from Cyprus yesterday in an attempt to break Israel's siege of the territory. The passengers include a holocaust survivor, Reuven Moskowitz, and Rami Elhanan, who lost his daughter to a suicide bombing in 1997, and a former Israeli Air Froce pilot, Yonatan Shapira. The voyage has been co-ordinated by the UK group Jews for Justice for Palestinians, which counts Marion Miliband, the mother of the new Labour Party leader, Ed Miliband, among its members. The passengers' spokesman, Alison Prager from the UK, said the voyage was an "opportunity to make clear to world public opinion that not all Jews support Israeli policy."

Settlements and the two state solution

* Some 300,000 Israelis live in more than 100 settlements. They have a separate infrastructure from adjacent Palestinian areas, and are protected by the army.

*Another 200,000 Israelis live in East Jerusalem, which was captured in the 1967 Six-Day War, or in areas of the West Bank that Israel annexed to Jerusalem after the war.

*Some 2.5 million Palestinians live in the West Bank and East Jerusalem. Israel has annexed East Jerusalem as part of its capital in a move that is not recognised internationally.

*The Israeli human rights group B'Tselem says settler activity covers 42 per cent of the area.

*Palestinian President Mahmoud Abbas says Israel must freeze settlement activity in line with the 2003 US and European-backed peace "road map", which also calls on Palestinians to curb violence.

*In 2004, the then-prime minister, Ariel Sharon, announced a plan to keep swathes of some six settlements in any future peace deal. No Israeli leader has deviated publicly from that proposal, which raises the likelihood that smaller settlements housing up to about 100,000 people could be abandoned.

*Israeli Prime Minister Benjamin Netanyahu ordered the partial freeze on settlement expansion last November for a 10-month period. Israel suspended plans to build an estimated 2,000 homes, but work went ahead on 3,000 projects that were already under way.

*The World Court deems settlements illegal under international law, including the Geneva Conventions.