Ahead of talks, Abbas warns Israel on settlements

RAMALLAH, West Bank (Reuters) - Palestinian President Mahmoud Abbas said Sunday Israel would be to blame for the failure of a new round of U.S.-sponsored peace talks if it continues settlement expansion on occupied land.

The Palestinians have threatened to pull out of the face-to-face peace talks with Israel, due to begin Thursday in Washington, unless it extends a moratorium on West Bank settlement building when it expires on September 26.

"Israel alone will bear the responsibility of threatening these negotiations with collapse and failure if it continues settlement expansion in all its forms in all the Palestinian lands occupied since 1967," Abbas said in a televised speech to the Palestinian people.

Abbas was referring to the West Bank and East Jerusalem, lands captured by Israel in the 1967 Middle East war and where the number of Jewish settlers now stands at some 500,000. The Palestinians aim to found a state in the West Bank and the Gaza Strip with East Jerusalem as its capital.

Israel imposed a 10-month, partial freeze on settlement building in the West Bank last November. The decision, taken under U.S. pressure, was designed to coax the Palestinians back to peace talks.

But the moratorium was deemed inadequate by Abbas because it excluded West Bank land annexed by Israel to Jerusalem municipality in 1967. The annexation has never won international recognition.

Israeli Prime Minister Benjamin Netanyahu's coalition comprises pro-settler parties, including his own Likud. Abbas, a central figure in two decades of peace talks, has repeatedly stated he does not believe Netanyahu is ready for peace.

Abbas said: "We hope that we can find in Israel a partner capable of taking fundamental and responsible decisions toward ending the occupation and guaranteeing true security for the Palestinian and Israeli people."

Israeli Foreign Minister Avigdor Lieberman, who says there is virtually no chance of reaching a peace deal within the one-year target set by the United States, Wednesday voiced confidence the Israeli cabinet would not extend the freeze.

Lieberman is himself a settler.

Israeli Vice Premier Silvan Shalom told Reuters Sunday the cabinet would vote on the issue only after the Jewish High Holidays later this month, which fall after the summit date.

The United States opposes settlement expansion but has stopped short of calling for Israel to extend the moratorium, which could threaten the governing coalition.

Instead, it has urged both Israel and the Palestinians not to take measures that could jeopardise the negotiations and said the settlement issue would be raised in next week's talks.

Seeking a compromise, Dan Meridor, a moderate in the Israeli cabinet, has proposed resuming construction only in major settlement blocs that Israel intends to keep in any future peace deal, which could include territorial swaps.

The Palestinians have rejected that idea, which they say would amount to accepting Israeli sovereignty over the blocs.

(Additional reporting by Tom Perry; Editing by Jon Boyle)