U.S. presses Israel on two-state solution, settlements

WASHINGTON (Reuters) - The Obama administration stepped up pressure on Israel's new government on Tuesday to accept the goal of a Palestinian state and halt expansion of Jewish settlements on occupied land.

Vice President Joe Biden urged Prime Minister Benjamin Netanyahu's right-leaning coalition to commit to a two-state solution, hours before President Barack Obama met Israeli President Shimon Peres to lay the groundwork for Netanyahu's visit later this month.

Since coming to power in March, Netanyahu has balked at recognizing the Palestinians' right to eventual statehood, an omission that has dismayed U.S., Arab and European officials. Peres said Israel would soon clarify its position.

"Israel has to work toward a two-state solution -- you're not going to like my saying this -- but not build more settlements, dismantle existing outposts and allow Palestinians freedom of movement," Biden told the leading U.S. pro-Israel lobbying group.

His challenge to Israel, in a speech to the American Israel Public Affairs Committee, went further than remarks made by Obama in talks last month with Jordan's King Abdullah reiterating U.S. support for Palestinian statehood.

Biden also urged the Palestinians to "combat terror and incitement against Israel" and sought to reassure Israel's supporters that the administration's efforts to engage Iran diplomatically would not endanger the Jewish state's security.

Peres, a Nobel Peace laureate known for more dovish views than the conservative Netanyahu, said Israel should give Obama's new Iran strategy a chance.

Deepening his role in reviving stalled Middle East peace efforts, Obama had White House talks with Peres, who holds a largely ceremonial post. Obama was due to host Netanyahu on May 18 and Palestinian President Mahmoud Abbas later in the month.

ISRAEL TO CLARIFY POSITION

Exiting the White House, Peres -- a longtime supporter of a two-state solution to the decades-old conflict -- did little to clear up questions about Netanyahu's stand on the issue.

"Mr. Netanyahu said that he will abide (by) the commitments of the previous government," Peres told reporters. "The previous government accepted the road map. In the road map you will find attitudes to the two-state solution."

He said the Israeli government would soon communicate its position to Obama, who has embraced the two-state principle that has been the basis for U.S. Middle East policy for years.

Speaking by video-link to AIPAC on Monday, Netanyahu said he was ready to resume peace talks immediately, but he made no reference to Palestinian statehood. Peace talks have stalled amid continued Israeli settlement building in the occupied West Bank and persistent anti-Israeli violence.

The 2003 "road map," sponsored by the Bush administration but widely ignored by both sides, called on Israel to halt settlement building and for Palestinians to rein in militants.

The international community considers settlements on occupied land to be illegal. Israel disputes this.

Obama has pledged to make Middle East peace a high priority, in contrast to former President George W. Bush.

Trying to keep tensions low before Netanyahu's visit, the White House had little to say after Obama's talks with Peres, except that they discussed "opportunities and challenges," including the peace process and Iran's nuclear program.

Biden also focused on efforts to persuade Iran to abandon its nuclear program, which the United States and its allies see as cover for developing nuclear weapons. Israel considers Iran the biggest threat to its security. Iran says its nuclear program is for the peaceful production of electricity.

Peres said Israel should support Obama's efforts to engage Iran diplomatically. He said that if Obama wanted to reach out to Iran, "we shall be loyal supporters."

Israeli officials have voiced concern about what they see as softening of the U.S. approach to Tehran and have not ruled out the use of military action against its nuclear sites.

(Additional reporting by Ross Colvin; Editing by Cynthia Osterman)