Obama, Netanyahu to meet as U.S. peace bid flounders

By Jeffrey Heller and Ross Colvin

WASHINGTON (Reuters) - Israeli Prime Minister Benjamin Netanyahu urged the Palestinians on Monday to resume negotiations with Israel, issuing the call before a meeting with President Barack Obama on the stalled Middle East peace process.

Saying "no Israeli government has been so willing to restrain settlement activity," Netanyahu told a conference of American Jewish leaders: "I say today to (Palestinian President) Mahmoud Abbas ... let us seize the moment to reach a historic agreement. Let us begin talks immediately."

A senior Israeli official said Netanyahu planned to tell Obama at the White House that "we mean business" and Israel was willing to be "generous in restraining" construction in settlements in the West Bank to get peace talks started again.

Abbas, who has threatened not to run in Palestinian elections in January and accused Washington of failing to press Israel strongly enough on settlements, has made a halt to their expansion a precondition for reviving negotiations.

Israeli President Shimon Peres has asked Abbas to reconsider. Netanyahu made no such appeal in his speech at the conference of the Jewish Federations of North America.

Rejecting a complete freeze, Netanyahu has proposed temporarily limiting building in the West Bank enclaves to 3,000 housing units. He has said East Jerusalem, also captured by Israel in a 1967 war, was must be kept out of the equation.

"My goal is not negotiations for the sake of negotiations. My goal is to achieve a permanent peace treaty between Israel and the Palestinians -- and soon," Netanyahu said in his speech to the Jewish Federations of North America.

"Let's get on with it. Let's move," he said, echoing appeals he has made in the past.

PALESTINIAN FRUSTRATION

The White House meeting is likely to anger Palestinians, who are already frustrated by what they perceive as backsliding by the Obama administration on the settlement issue.

Obama has eased U.S. pressure on Israel over settlements, calling for restraint in construction where he had earlier pushed for a freeze. Palestinians say that shift in policy has killed any hope of reviving negotiations soon.

In Israel, the last-minute scheduling of the White House meeting after Israeli officials said over the past several weeks that Netanyahu hoped to see Obama, was widely seen as a sign of strained relations between the two leaders.

Aides to Netanyahu said he and Obama would discuss the peace process and the nuclear standoff with Iran.

During a visit to the Middle East last week, U.S. Secretary of State Hillary Clinton faced strong Arab criticism over the U.S. stance on the settlement issue.

She insisted Washington still wanted a freeze on settlement construction but believed that resuming peace talks, suspended since December, was the best way to curb them.