Blair urges Netanyahu not to abandon peace talks

Israel's Prime Minister Benjamin Netanyahu attends a session of the Knesset, the Israeli parliament, in Jerusalem April 6, 2009.

JERUSALEM (Reuters) - Middle East envoy Tony Blair urged Israel's prime minister on Monday to resume Palestinian statehood talks in parallel with a push to boost the West Bank economy and to let Palestinians control more of their territory.

Blair met rightist Benjamin Netanyahu, who took office last week, laying out in broad terms how the "Quartet" of Middle East mediators -- the United States, the European Union, Russia and the United Nations -- wants to see stalled peacemaking proceed.

"There is a great deal of skepticism out there," Blair told reporters after talks with Netanyahu.

Tasked by the Quartet with spearheading economic development in the occupied West Bank, Blair said providing Palestinians with greater freedom of movement was central to creating the foundations for statehood.

But the former British prime minister said he told Netanyahu that a "credible political negotiation for a two-state solution" should be conducted "in parallel" with that.

Marc Otte, the European Union's Middle East envoy, concurred: "You cannot change things on the ground without having a political perspective on what it is that we're doing."

Netanyahu has been vague about renewing talks over thorny territorial issues, saying his priority was to focus instead on the creation of development zones and on ways to ease roadblocks and checkpoints that inhibit travel and trade in the West Bank.

Last week, Netanyahu's foreign minister, ultranationalist Avigdor Lieberman, declared that negotiations over statehood borders, and the fate of Jerusalem and Palestinian refugees, launched at a U.S.-sponsored conference in Annapolis, Maryland in November 2007, had "no validity."

Otte, speaking to reporters in Jerusalem earlier on Monday, said that Annapolis was "binding" on Israel because it was endorsed by the U.N. Security Council.

"My view is that he (Netanyahu) does understand that, if the right context can be created for peace, the only lasting peace is based on a two-state solution," Blair said.

He said he told Netanyahu that in addition to improving economic conditions in the West Bank, it was essential security forces of Western-backed Palestinian President Mahmoud Abbas progressively "take control of their own territory."

Otte said the focus should be on creating what he called "trade routes" that would make it easier for Palestinian businesses to transport their goods to market.

Blair also urged Netanyahu to ease Israel's blockade of the Gaza Strip, which Hamas Islamists seized in June 2007 after routing forces loyal to Abbas's secular Fatah faction.

Aides said Blair saw Israel's decision last year to give Abbas's U.S.-trained security forces greater control over the northern West Bank city of Jenin as a model that could be applied to other parts of the territory.

The administration of U.S. President Barack Obama plans to expand its training program for Abbas's forces. Speaking in Turkey on Monday, Obama said Washington "strongly supports the goal of two states, living side by side in peace and security."

(Reporting by Adam Entous; Editing by Samia Nakhoul)