Netanyahu plays down new construction in settlements

Israel's Prime Minister Benjamin Netanyahu (R) speaks during a Likud party meeting at parliament in Jerusalem October 18, 2010.

JERUSALEM (Reuters) - Prime Minister Benjamin Netanyahu played down on Monday new Israeli construction on land Palestinians seek for a state, urging them to return to peace talks halted over the resumption of settlement building.

"The discourse about new building is an artificial obstacle," said Netanyahu, who has resisted Palestinian and international calls to extend a partial construction freeze in West Bank settlements.

Palestinians charge that settlement building in East Jerusalem and the West Bank, areas Israel captured in a 1967 war, undermines efforts to build a viable, contiguous Palestinian state.

"The new construction is inconsequential. It has absolutely no effect on the map of a possible (peace) agreement," Netanyahu told reporters at a meeting with legislators from his right-wing Likud party.

He made the remarks four days after the government announced a plan to erect 238 more homes in Pisgat Zeev and Ramot, urban areas settled by Jews in a part of the West Bank that Israel annexed to Jerusalem after the 1967 conflict in a move never accepted by the international community.

Palestinian negotiator Saeb Erekat said the projects showed Israel was choosing "settlements over peace" and demonstrating "why there are no negotiations today."

U.S.-brokered talks began on September 2 but the Palestinians suspended them after a 10-month moratorium on housing starts in West Bank settlements expired on September 26.

Calling on Palestinian President Mahmoud Abbas to have a "face-to-face" meeting with him, Netanyahu said: "If they (the Palestinians) want to solve problems, I can think of numerous ways to bridge this gap and to make progress in the talks.

U.S. DIPLOMACY

The end of Israel's partial construction freeze has led to renewed building in a handful of West Bank settlements amid U.S. opposition to such construction and Washington's diplomatic efforts to revive the negotiations.

A senior Israeli official said more extensive building plans for East Jerusalem had not been announced "to avoid sabotaging talks with the Americans" on salvaging peace efforts.

Palestinians want East Jerusalem as the capital of the state they hope to establish in the West Bank and Gaza Strip. Israel considers all of Jerusalem as its capital, a position that has not won international recognition.

Israel has insisted East Jerusalem was never part of its construction freeze, though many building plans in Israeli-annexed parts of the city were quietly put on hold after Washington was embarrassed by tenders leaked during a March visit by U.S. Vice President Joseph Biden.

Israel says the settlement issue should be resolved in discussions about future borders and not serve as a precondition for talks.

Some 500,000 Israelis live in the West Bank and East Jerusalem among 2.5 million Palestinians.

(Editing by Paul Taylor)