Fayyad sees no agreement yet to resume Israel talks

A Palestinian youth throws a stone towards Israeli troops during minor scuffles in the West Bank village of Burin near Nablus January 28, 2010.

DAVOS, Switzerland (Reuters) - Palestinian Prime Minister Salam Fayyad said Thursday there was no agreement yet to resume talks with Israel, and Palestinians would have no faith in a process which failed to halt Israeli settlements.

A Palestinian official said this week President Mahmoud Abbas was studying a U.S. proposal for talks at a level below full-scale negotiations between leaders, which have been frozen for 13 months.

"We heard about low-level, mid-level, high-level (talks)," Fayyad told Reuters. "I don't think there is anything yet that has been crystallized in terms of going forward."

U.S. Middle East peace envoy George Mitchell has been trying to bring about a resumption of negotiations but Abbas has insisted first on a full halt to Israeli settlement construction in the occupied West Bank, including East Jerusalem.

He has rejected a 10-month, partial Israeli freeze, announced in November, as insufficient.

"We Palestinians stand to lose the most from a stalled peace process, but we would still like to see the process resumed in a way that would give us confidence that it can actually deliver what it should be able to deliver," Fayyad said on the sidelines of the World Economic Forum in Davos.

"I don't know when the process will be resumed."

He said Palestinians could not have any faith in peace talks if they failed to deliver "something as basic as requiring Israel to completely stop settlement activity."

TOWARD STATEHOOD?

Palestinian sources familiar with Mitchell's latest round of diplomacy said he had proposed confidence-building measures that would improve conditions in the Palestinian territories.

Israeli officials, noting that Prime Minister Benjamin Netanyahu had Sunday welcomed unspecified "new ideas" for talks from Mitchell, said their government stood ready to take part in U.S.-mediated discussions with Palestinian officials.

A year of U.S. diplomatic efforts has so far failed to relaunch talks aimed at ending the decades-old conflict through a peace treaty agreeing to the creation of a Palestinian state in the West Bank and Gaza Strip.

Fayyad, who told Palestinians in June to start building up institutions of statehood with the aim of establishing a state within two years, said they were making progress to their goal in the absence of talks with Israel.

"There is hardly a day which passes without a meaningful step being taken toward Palestinian statehood," he said. He gave no concrete example but said Palestinian governance on the West Bank was beginning to mature.

Palestinians are effectively split between the West Bank, where Abbas's Fatah faction holds sway, and Gaza, which is controlled by the Islamist Hamas movement and has been under an Israeli-led blockade.

Fayyad said the efforts in the West Bank were "something we can take to Gaza... once the siege is lifted and the separation is ended."

(Editing by Hans Peters)