Biden appeals for Mideast peace talks without delay

TEL AVIV (Reuters) - Vice President Joe Biden called on Thursday for Israeli-Palestinian peace talks to start without delay despite Palestinian insistence that Israel first cancel a settlement project condemned by Washington.

Israel's announcement this week, during Biden's visit, of plans to build 1,600 settler homes in an area of the occupied West Bank it annexed to Jerusalem, cast a shadow over U.S. efforts to relaunch Middle East peacemaking.

"The most important thing is for these talks to go forward and go forward promptly and go forward in good faith," Biden said in a speech at Tel Aviv University. "We can't delay because when progress is postponed, extremists exploit our differences."

The settlement announcement embarrassed Biden, who said it undermined peace efforts, and infuriated the West Bank-based Palestinian leadership, which had agreed to a U.S. proposal for indirect talks under pressure from Washington and Arab allies.

Arab League Secretary General Amr Moussa said on Wednesday that Palestinian President Mahmoud Abbas had told him he had decided not to enter the talks for now. The Arab League had endorsed a four-month framework for the U.S.-mediated negotiations.

In a telephone conversation with Biden before the Tel Aviv address, Abbas "reiterated to him that Israel must annul the settlement project in Jerusalem so that indirect talks will not be obstructed," Abbas aide Nabil Abu Rdainah told Reuters.

But the State Department said it had received no information to indicate that Abbas would drop out of the planned talks.

"I don't think that that report that's been circulating for the last 24 hours is accurate. We've heard nothing to indicate that they've pulled out," State Department spokesman P.J. Crowley told a news briefing.

U.S. officials expressed confidence that despite the flare-up, the indirect negotiations could begin as early as next week, when U.S. Middle East envoy George Mitchell is scheduled to return to the region.

In his address, Biden gave no sign Washington would press Israel to cancel the settlement project as the Palestinians have demanded, and Israeli officials made clear it would not do so.

Instead, he termed "significant" assurances from Prime Minister Benjamin Netanyahu that building at the site, a religious settlement, would not start for years.

With no construction scheduled for now, Biden said, negotiators would have time to "resolve this and other outstanding issues." He stressed that indirect talks should lead to direct negotiations on key issues of Palestinian statehood.

In a statement, Netanyahu said he had voiced his displeasure to his interior minister, a leader of the ultraorthdox, nationalist Shas party, over the timing of the announcement of the project. But there appeared to be little chance of any imminent crisis within his governing coalition.

ISRAELI ASSURANCES

Biden's speech was widely seen in Israel as an attempt by the White House to counter-balance the address to the Muslim world that President Barack Obama delivered in June in Cairo.

Many Israelis view Obama with suspicion, and Biden reaffirmed in his speech a U.S. commitment to Israel's security and what he called Washington's determination to ensure that Iran does not obtain nuclear weapons.

On the Israeli-Palestinian diplomatic front, Mitchell, who has been trying to broker for a year a resumption of talks, was expected to return to Israel and the West Bank next week.

Abbas had demanded a full settlement freeze in the West Bank and East Jerusalem, areas captured by Israel in a 1967 war, before any resumption of the two-decade old peace process.

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

"Jerusalem is the capital of Israel and construction there will be carried out like in Tel Aviv or any other city -- in every part of Jerusalem according to the plans," Israeli Cabinet Secretary Zvi Hauser told Israel Radio. The Palestinians say the settlements, considered illegal by major world powers, will deny them a viable state. Under U.S. pressure, Israel announced in November a decision to restrain building in its West Bank settlements for 10 months but said the restrictions would not include East Jerusalem.

Foreign Minister Miguel Angel Moratinos of Spain, which represents the European Union presidency, expressed concern over the announcement of the new settlements to Israeli counterpart Avigdor Lieberman.

"I expressed my real deep concern, hoping that this settlement activity will be ended, and there will be no more announcement, no more expansion work," Moratinos said.

(Additional reporting by Mohammed Assadi in Ramallah and Ori Lewis and Jeffrey Heller in Jerusalem and Adam Entous; Writing by Jeffrey Heller and Tom Perry; Editing by Mark Trevelyan)