Abbas: No talks without East Jerusalem building freeze

Palestinian President Mahmoud Abbas (C) gestures during a news conference with Barakat Al-Farra (R) the Palestinian Authority ambassador to Egypt, and Saeb Erekat (L), the Palestinian chief of the PLO Steering and Monitoring Committee after meeting with Egyptian President Hosni Mubarak at the presidential palace in Cairo November 21, 2010.

CAIRO (Reuters) - The Palestinian Authority will not return to peace talks with Israel unless there is a freeze on settlement building that includes East Jerusalem, Palestinian President Mahmoud Abbas said on Sunday.

Abbas, in Egypt for talks with President Hosni Mubarak, said the Palestinians and Israel had received no official U.S. request to return to talks which stalled three weeks after their launch in September when an Israeli settlement freeze expired.

Asked if the Palestinian Authority would agree to resume the talks if a new settlement freeze did not include East Jerusalem, Abbas said: "If there is no complete halt to settlements in all of the Palestinian territories including Jerusalem, we will not accept."

Israel sees East Jerusalem, which it captured along with the West Bank in a 1967 war, as a part of its capital -- a status not recognized abroad. Palestinians want the city as capital of a future Palestinian state.

Israel has refused in the past to halt construction in East Jerusalem as part of any settlement freeze.

Netanyahu's cabinet approved a five-year blueprint on Sunday to accommodate more visitors at a Jewish holy site in the city, the Western Wall, revered as a remnant of one of two biblical temples. The site sits at a flashpoint in the conflict, next to the al-Aqsa mosque, Islam's third holiest site.

SETTLEMENT FREEZE INCENTIVES?

Israel said a week ago that the United States has proposed a prospective package of incentives in exchange for a 90-day settlement freeze in hopes of reviving the stalled peace talks.

Prime Minister Benjamin Netanyahu has signaled he would ask his security cabinet to vote on a new settlement freeze only once he saw these U.S. guarantees on paper.

The incentives Washington was said to have offered Israel include a supply of 20 F-35 stealth warplanes worth $3 billion.

Abbas said he thought it unacceptable to link the settlements issue with a U.S. offer of additional military aid to its Israeli ally.

"It is not just us who want a halt to settlements but also the United States and the world and a big part of Israeli public opinion," Abbas said.

Abbas also wants a clear outline from Israel on borders for a future Palestinian state. Netanyahu told deputies of his right-wing Likud party on Sunday he would not prioritize talks about borders.

"There won't be any separate talks held about borders," Netanyahu said, according to a statement from his office. The issue would be negotiated as part of a wider discussion of "substantive issues" between the sides, it said.

Palestinian officials have accused Netanyahu of destroying prospects for peace by allowing settlement building to continue on land that Palestinians want for a future state.

Uzi Arad, Israel's national security adviser, charged in televised remarks made on Saturday that Abbas was "making various excuses" to avoid negotiations for the past year.

Abbas said he expected the United States to provide the official request to resume talks "very soon," and the Arab League and Palestinian leadership would respond in due course.

(Additional reporting by Allyn Fisher-Ilan and Dan Williams in Jerusalem; Editing by Peter Graff)