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By Andrew Quinn and Alastair Macdonald
JERUSALEM (Reuters) - Hillary Clinton turned U.S. pressure on Palestinian President Mahmoud Abbas on Saturday when she endorsed Israel's view that its expansion of settlements on occupied land should not be a bar to resuming peace talks.
On a flying one-day visit across the Middle East, President Barack Obama's secretary of state appeared to complete what is at least a shift in emphasis from the new U.S. administration, which in its first months in office this year strongly endorsed Palestinian demands that all Jewish settlement must be halted.
Obama himself, after persuading Abbas in September to meet new Israeli Prime Minister Benjamin Netanyahu, called only for "restraint" in settlement, not the "freeze" he initially spoke of. On Saturday in Jerusalem, Clinton agreed with Netanyahu that it was unprecedented for Abbas to shun talks due to settlements.
A spokesman for Abbas, who faces intense domestic pressure from Hamas Islamists who say he is selling out, insisted that he would not resume suspended negotiations as long as Israel went on building in the occupied West Bank and East Jerusalem, where half a million Jews already live alongside some 3 million Arabs.
Asked at a news conference with Netanyahu about Palestinian conditions for relaunching the stalled peace process, Clinton said of the settlements: "There has never been a precondition. It's always been an issue within the negotiations."
"Where we are right now is to try to get into negotiations."
3,000 HOMES
Netanyahu has proposed limiting building for now to some 3,000 settler homes already approved by Israel in the West Bank. He does not regard building in occupied East Jerusalem, annexed in defiance of international complaint, as settlement.
Clinton praised Israel's efforts and said she expected its proposals for talks would address past criticism: "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 unprecedented but in response to many of the concerns that have been expressed."
However, Abbas spokesman Nabil Abu Rdainah, speaking from Abu Dhabi where Abbas met Clinton earlier on Saturday, said there could be no change in the Palestinian position: "A settlement freeze and acknowledging the terms of reference is the only way towards peace negotiations," he said. "Settlement is illegitimate and it is not possible to accept any justification for the continuation of settlement activity or to defend it on lands occupied in 1967, including Jerusalem."
Six decades after Israel was established in 1948, four since it occupied the remaining Arab lands of what was British-ruled Palestine and nearly 20 years since the first glimmerings of a peace process, a final agreement on core conflicts over borders, refugees and control of Jerusalem remains stubbornly elusive.
A U.S.-backed peace "road map" of 2003 does say Israel should halt settlement activity. Abbas, however, took part in a negotiating process launched at Annapolis in late 2007 by Obama's predecessor George W. Bush. Abbas suspended negotiations over Israel's offensive last December in the Gaza Strip.
Having invested considerable capital in seeking a solution for Palestinians and Israelis as part of a broader thrust to help stabilise the oil-rich Middle East, Obama faces an early setback in his presidency if the two sides refuse even to talk.
Netanyahu's coalition, including pro-settler groups, does not believe Abbas is strong enough to deliver Israel security in any deal. Some analysts see Netanyahu's cooperation with Obama's demand for a resumption of talks on establishing a Palestinian state as intended mainly to ensure U.S. support against Iran.
Palestinians warn that popular frustration with the failure to produce a statehood deal could spill over into an upsurge in violence, even if few have appetite for a broad new uprising.
Meeting Clinton on Saturday, Netanyahu said of Abbas's condition of a settlement freeze: "It's a change of Palestinian policy and it doesn't do much for peace. It ... is used as a pretext ... that prevents the re-establishment of negotiations.
"I think that what we should do on the path to peace is to simply to get on it and get with it."
Clinton's spokesman denied a suggestion that she had specifically asked Abbas to accept Netanyahu's offer to limit settlement building to 3,000 new units in return for a resumption of talks.
(Additional reporting by Ali Sawafta in Ramallah, Tom Perry and Joseph Nasr in Jerusalem; writing by Alastair Macdonald; Editing by Kevin Liffey)

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