* Israeli-Palestinian talks frozen
* Settlement issue a main stumbling block
* U.S. envoy due to return to region soon
(Adds Palestinian reaction, paragraph 6)
JERUSALEM, July 13 (Reuters) - Israel on Monday dismissed and the Palestinians welcomed a call by the European Union's foreign policy chief for U.N. recognition of a Palestinian state if negotiators fail to achieve a peace agreement.
"Peace must be built, not imposed," Foreign Minister Avigdor Lieberman told Israel Radio, questioning whether remarks made by the EU's Javier Solana in a lecture in London on Saturday represented the policies of the European Union.
"With all due respect to Solana, he's about to retire ... and we should not overstate the importance of his statement," Lieberman said.
Solana said mediators should set a timetable for an Israeli-Palestinian peace agreement and "if the parties are not able to stick to it, then a solution backed by the international community should be put on the table".
After such a deadline has passed, he said, "a U.N. Security Council resolution should proclaim the adoption of the two-state solution" and accept a Palestinian state as a full member of the United Nations.
Asked about Solana's proposal, chief Palestinian negotiator Saeb Erekat said: "We do not object. It's time for the international community to stop treating Israel as above the laws of man."
Israeli-Palestinian peace talks backed by a quartet of international mediators -- the European Union, the United States, the United Nations and Russia -- are frozen.
Palestinian President Mahmoud Abbas has said he will not revive the negotiations unless Israel halts settlement expansion in the occupied West Bank, in accordance with a 2003 peace "road map" that commits the Palestinians to rein in militants.
U.S. President Barack Obama's Middle East envoy, George Mitchell, was due to return to the region soon, U.S. officials said, for further talks with Israel on ending a rift with Washington over halting construction within settlements.
No date has been announced for the visit, but Erekat said Mitchell would arrive in 10 days' time. (Additional reporting by Mohammed Assadi in Ramallah and Anne Jolis in Brussels; Writing by Jeffrey Heller; Editing by Andrew Dobbie) (For blogs and links on Israeli politics and other Israeli and Palestinian news, go to
Our Standards: The Thomson Reuters Trust Principles.