US President Joe Biden met Palestinian leader Mahmud Abbas in the occupied West Bank on Friday for talks expected to focus on economic measures without striking any major diplomatic breakthrough.

His arrival in Bethlehem comes ahead of a visit to Saudi Arabia, whose leaders on Friday changed aviation rules in an apparent gesture of openness towards Israel.

Riyadh paved the way for Israeli planes to use its airspace by announcing it was lifting restrictions on "all carriers", a move welcomed by Biden as "historic".

US President Joe Biden greets fans as he attends the opening ceremony of the Maccabiah Games at Teddy Stadium in Jerusalem on July 14
US President Joe Biden greets fans as he attends the opening ceremony of the Maccabiah Games at Teddy Stadium in Jerusalem on July 14 POOL via AFP / RONEN ZVULUN

The president's visit to the Saudi city of Jeddah will follow talks with Abbas, the latest high-level diplomatic meetings after those with the Israeli leadership on Thursday.

Turning his attention to Palestinian affairs, Biden visited a hospital in Israeli-annexed east Jerusalem on Friday where he announced a $100 million aid package for medical institutions in the area.

"These hospitals are the backbone of the Palestinian healthcare system," he said, after talking extensively about his own family's experience of emergency care.

Chart showing changes in oil production by the United States, Saudi Arabia and Russia since 2018
Chart showing changes in oil production by the United States, Saudi Arabia and Russia since 2018 AFP / Emmanuelle MICHEL

With Israeli-Palestinian peace negotiations moribund since 2014, a US official said the delegation would be taking economic measures.

They include an "additional $201 million" for the UN agency serving Palestinian refugees (UNRWA), a senior administration official said.

Funding for the agency was cut by Biden's predecessor Donald Trump.

But Biden made clear on Thursday he had no plans to reverse the controversial move to recognise Jerusalem as Israel's capital by Trump, which infuriated Palestinians who see its eastern sector as the seat of their future state.

US President Joe Biden's visit has sparked strong reactions: here Palestinian demonstrators wave flags as they gather to protest against it in Gaza City on July 14
US President Joe Biden's visit has sparked strong reactions: here Palestinian demonstrators wave flags as they gather to protest against it in Gaza City on July 14 AFP / MOHAMMED ABED

The US delegation will also unveil plans to roll out infrastructure for 4G internet across the Gaza Strip and the West Bank by the end of next year, fulfilling a longstanding aspiration among Palestinians as some of their Israeli neighbours already tap in to faster 5G networks.

US President Joe Biden and Israel's caretaker Prime Minister Yair Lapid sign a security pledge in Jerusalem on July 14
US President Joe Biden and Israel's caretaker Prime Minister Yair Lapid sign a security pledge in Jerusalem on July 14 AFP / Mandel NGAN

With Palestinians banned by Israel from political activity in Jerusalem, the US president travelled to Bethlehem to meet Abbas.

A muted welcome awaited him from Palestinians there.

"He cannot buy us off," said Tamer Mustafa, a 20-year-old Palestinian in downtown Bethlehem.

"The visit is not about peace, it is about Israel. Many people are angry because he said he was a Zionist."

Palestinian security officers deploy near the Church of the Nativity in Bethlehem in the occupied West Bank, on July 14, 2022, ahead of US President Joe Biden's arrival
Palestinian security officers deploy near the Church of the Nativity in Bethlehem in the occupied West Bank, on July 14, 2022, ahead of US President Joe Biden's arrival AFP / ABBAS MOMANI

The Palestinian president has been in office since 2005 and last year scrapped elections, accusing Israeli officials of refusing to guarantee voting in east Jerusalem.

Biden on Thursday reiterated Washington's support for "a two-state solution for two people, both of whom have deep and ancient roots in this land."

While Israeli Prime Minister Yair Lapid said he ultimately backs a two-state solution, the caretaker leader is not expected to take any steps towards a peace agreement ahead of elections in November.

The Israeli government has recently adopted an approach known as "shrinking the conflict", taking economic measures such as increasing the number of permits for Palestinians to work in Israel.

The World Bank put the poverty rate in the Palestinian territories at 27 percent last year, saying in April that the outlook "remains precarious and subject to additional political and security risks".

Finding a lasting solution to the decades-long conflict was, however, not the top priority during Biden's meeting in Jerusalem with Lapid.

Iran's nuclear programme and its support for Islamist groups such as Hamas, which rules Gaza, was the focal point of Thursday's talks.

Biden and Lapid signed a new security pact, in which Washington committed to using all its "national power" to ensure Tehran does not obtain a nuclear weapon.

Washington is currently trying to get the nuclear deal between Tehran and world powers back on track, after it was derailed by Trump's unilateral withdrawal in 2018.

In a tweet on Friday, Iran's Foreign Minister Hossein Amir-Abdollahian said Biden's trip to Israel was a "puppet show" that made his country "more determined" to protect its nuclear interests.

Following the visit to the West Bank, Biden will fly from Israel to Iran's regional rival Saudi Arabia.

Riyadh's decision to scrap airspace restrictions was welcomed as "good news" by Lapid.

Saudi Arabia has long stressed its commitment to the decades-old Arab League position of not establishing official ties with Israel until the conflict with the Palestinians is resolved.

The US president is expected to meet Arab leaders from the Gulf Cooperation Council, who are gathering in the Saudi city of Jeddah, to discuss volatile oil prices.