* Abbas set to report no progress in indirect talks
* Palestinians set to continue indirect talks till September
* Lieberman says no place for extension of settlement freeze
By Ali Sawafta
RAMALLAH, West Bank, July 28 Palestinian President Mahmoud Abbas will tell the Arab League on Thursday indirect talks with Israel have not progressed enough to justify face-to-face peace negotiations, a Palestinian official said on Wednesday.
"Abbas will tell them that, until this moment, there is nothing to convince us to go to direct talks," the official told Reuters. "There is nothing new."
Resisting U.S. pressure, the Palestinian leader has said he first wants indirect talks to make progress, specifically on the issues of the security and borders of a Palestinian state he aims to found on land occupied by Israel since 1967.
He will brief the Arab League's peace process committee in Cairo on Thursday on the state of the current U.S.-mediated indirect talks that began in May after the forum's approval of a four-month timeframe, due to end in September. U.S. President Barack Obama's Middle East envoy, George Mitchell, last met Abbas on July 17 in Ramallah. Palestinian officials said that at that session, Abbas turned down a U.S. request to begin direct negotiations.
Israeli Prime Minister Benjamin Netanyahu says he wants to begin direct talks with the Palestinians immediately.
But the Palestinian official said: "We will tell the Arabs that the Americans brought nothing with them. We will most likely continue the remaining two months (of indirect talks) and see what happens."
Obama, seeking to revive the Middle East peace process, said earlier this month he hoped direct talks would begin by September -- before Israel's 10-month partial freeze on Jewish settlement building in the West Bank ends.
Netanyahu has voiced reluctance to extend the moratorium, which could further complicate U.S. efforts to get Abbas to the negotiating table.
Netanyahu heads a coalition that includes pro-settler parties, including one led by Foreign Minister Avigdor Lieberman, who said on Wednesday there was "no place for any moratorium after 25 September".
The fate of Jewish settlements built on Israeli-occupied land is one of the main issues confronting the diplomatic process.
Abbas, a central figure in years of negotiations aimed at creating a Palestinian state alongside Israel, is seen as wary of face-to-face talks with a right-wing Israeli leader he doubts is willing to make an offer the Palestinians can accept.
Israeli cabinet minister Isaac Herzog, a member of the centre-left Labour Party, called the Israeli-Palestinian impasse a "chicken-and-egg" situation.
"Abu Mazen (Abbas) says: 'I don't want to enter direct negatiations until I know what the final result will be.'," Herzog told Israel Radio.
"Netanyahu says: 'Enter direct negatiations and I will also tell you what the final result will be.' Each one looks at it opposite, and we are in a sort of political trap."
Netanyahu, who has pledged to take "political risks" for peace but has yet to announce promised confidence-building gestures towards the Palestinians, says Abbas is wasting time.
Abbas, head of an administration that depends on Western aid, has surprised many observers with his resistance to U.S. pressure. The 75-year old is under domestic pressure to avoid more negotiations in which he is by far the weaker player. ** For a FACTBOX on the Israeli-Palestinian conflict please double click on [ID:nLDE66J08E] (Writing by Tom Perry; Editing by Louise Ireland)