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Rice says Israeli settlement plans "not helpful"

WASHINGTON (Reuters) - U.S. Secretary of State Condoleezza Rice, in rare public criticism of Israel, said on Wednesday that plans to build hundreds of new homes in a Jewish settlement in the occupied West Bank were unhelpful for peace.

“The United States considers the expansion of settlement activity to be not consistent with Israeli obligations under the road map and we have made that very clear. I have also said that it is certainly not helpful for the peace process,” Rice told U.S. lawmakers.

The Palestinians have denounced Israeli settlement expansion plans as a blow to U.S.-brokered peace talks, which were briefly derailed last week following an Israeli offensive into Gaza.

Rice, who was in the region last week to get Palestinians back to talks, said both sides needed to fulfill their obligations under a 2003 Middle East “road map” for peace that required Israel to halt all settlement activity and for Palestinians to rein in militants.

U.S. Gen. William Fraser, appointed by Rice to help oversee those commitments, is set to hold a meeting on Friday with both sides to discuss the issue.

“I can assure you that we are following very closely to assure that U.S. dollars are not being used to support the settlement activity,” Rice told a hearing of a House of Representatives appropriations subcommittee.

U.S. President George W. Bush has said he hopes a peace treaty will be signed before he leaves office in January, 2009 that leads to a Palestinian state.

But with talks going at a slow pace, analysts are pessimistic whether any agreement will be reached by then and they question how far-reaching such a deal could be while the Palestinian territories is divided between Hamas-run Gaza Strip and the West Bank controlled by President Mahmoud Abbas.

But Rice told lawmakers she was optimistic and that both Abbas and Israeli Prime Minister Ehud Olmert were committed to the peace talks relaunched in Annapolis, Maryland, last November.

“I believe we have got, still, a good chance, as the president put it, plenty of time to get an agreement by the end of this year,” said Rice. “It’s going to take hard work and there are some very difficult issues.”

Rice was pushed by lawmakers to get Arab allies such as Saudi Arabia to do more to help build up the West Bank as part of the U.S. strategy to bolster Abbas and convince Palestinians his talks with Israel will improve their lives on the ground.

“Unless the Palestinians are supported by Saudi Arabia and the emirates and all the other countries in the region, it’s going to be very difficult for them to take that final step,” said Rep. Nita Lowey, a Democrat from New York.

“So, again, I would just like to urge you and the president to urge our friends, the Saudis,” she added.

Rice said Saudi Arabia had made pledges of financial support for the Palestinians and they must follow through on that.

“I’m always for people doing more,” said Rice.

Editing by David Wiessler