US Secretary of State Hillary Rodham Clinton on Saturday night rejected Palestinian Authority President Mahmoud Abbas's demand that Israel freeze all settlement activity as a precondition to negotiations.
Stopping construction in the settlements "has never been a precondition, it has always been an in issue within the negotiations," Clinton said at a joint press conference with Prime Minister Binyamin Netanyahu in Jerusalem.
In a strong show of support for Israel, she said she approved of Netanyahu's decision to issue a moratorium on new construction permits.
"What the prime minister has offered... a restraint on the policy of settlements, which he has just described, no new starts, for example, is unprecedented in the context of prior to negotiations," Clinton said, in advance of her meeting with the prime minister.
Assistant Secretary of State for Public Affairs Philip J. Crowley later clarified for The Jerusalem Post that the United States is still demanding that Israel freeze all settlement activity, but that it should not be a precondition for talks between Israelis and Palestinians.
Clinton arrived in Israel on Saturday evening for a brief visit as part of a regional trip, during which she hoped to restart the stalled Israeli-Palestinian peace talks. She met with Foreign Minister Avigdor Lieberman and Defense Minister Ehud Barak at the David Citadel Hotel before going on to the Prime Minister's Office for talks with Netanyahu.
Earlier in the day, Clinton met with Abbas in Abu Dhabi. He rejected Clinton's request to resume peace talks with Israel, saying this would not happen unless the Netanyahu government froze all construction in the settlements, chief PA negotiator Saeb Erekat said.
Israel has insisted that work must continue on the 3,000 homes now under construction in the settlements and says there are no limits on building in Jerusalem.
PA officials described the meeting with Clinton as "hard" and expressed deep disappointment over what they said was Washington's refusal to pressure Israel to halt construction in the settlements.
According to Erekat, Abbas turned down an offer by the US to resume the peace talks on final-status issues on the basis of "understandings" reached between Washington and Israel regarding settlement construction.
"President Abbas rejected the offer because the understandings are completely unacceptable," Erekat said.
In Jerusalem on Saturday night, in response to a press query, Clinton said, "It is a fact that for 40 years presidents of both parties have questioned the legitimacy of settlements."
She added, however, that "where we are right now is to try to get into the negotiations. The prime minister will be able to present his government's proposal about what they are doing regarding settlements, which I think when fully explained will be seen as being not only as unprecedented but in response to many of the concerns that have been expressed."
Clinton continued, "We hope that we will be able to move into the negotiations where all the issues" will be on the table.
Netanyahu said that Israel was willing to talk with the Palestinians without any conditions.
"We are prepared to start peace talks immediately," he said. "What we should do on the path to peace is to get on it and to get with it."
He said that in the past 16 years the Palestinians had never demanded that Israel freeze settlement activity as a precondition to talks and that their stance now was a change in policy.
It's a stance that Erekat said the Palestinians were insisting upon.
"The Palestinian Authority won't make any concessions on the issue of settlements," he said.
He claimed that the "understandings" reached between Israel and Washington did not include a full cessation of settlement construction, including inside Jerusalem.
Erekat said that halting settlement construction was the "only way to ensure the revival of the peace process."
He added that the gap between the Palestinians and Israel remained very wide - a factor that is hindering the resumption of the peace talks.
Asked about the outcome of his meeting with Clinton, Abbas told reporters: "There's nothing new. We reaffirmed that peace requires a complete cessation of settlement construction."
Abbas said that the "problem" with the Israeli government was that it was refusing to stop settlement construction in line with the peace process.
He said that his talks with Clinton focused on the situation in Jerusalem. "The city is in danger," he said. "The Arabs and Muslims must pay attention to this."
Nabil Abu Rudaineh, a spokesman for Abbas, blamed Israeli "intransigence" for the failure of US efforts to restart the peace talks.
In an effort to resume those talks, Clinton intends to consult with a range of Arab foreign ministers on the Israel-Palestinian stalemate when she attends an international conference in Morocco on Monday and Tuesday.
She is not the only American official traveling in the region. US special envoy George Mitchell was also in Israel this weekend, and met on Friday with Netanyahu.
On Friday, Clinton had played down expectations for her trip to Israel and the Palestinian Authority, which comes after months of fruitless efforts to find a diplomatic formula for restarting peace talks.
"I am not expecting any kind of big breakthroughs. That's not the purpose of it," she told CBS News. "We know how difficult it is for both sides to enter into negotiations."
She reiterated the commitment of the Obama administration to finding a resolution despite the lack of progress on the ground, saying, "I am not somebody who believes that it is ever going to be easy. But we are going to keep trying as hard as we can."
Hilary Leila Kreiger, Jerusalem Post staff and AP contributed to this report.