West Bank - Israel and the Palestinians belittled each other's commitment to peace as U.S. President Barack Obama admitted on Thursday he had underrated the difficulty of reviving deadlocked Middle East negotiations.

As his envoy George Mitchell began a fresh attempt to get the two sides talking to each other, Obama told Time Magazine: This is just really hard ... and if we had anticipated some of these political problems on both sides earlier, we might not have raised expectations as high.

Obama said his administration had underestimated the internal political constraints preventing bold peace moves by either camp and 2009 had ended without the kind of breakthrough he set out to achieve at the start of his term.

Moving forward, though, we are going to continue to work with both parties to recognize what I think is ultimately their deep-seated interest in a two-state solution in which Israel is secure and Palestinians have sovereignty and can start focusing on developing their economy and improving the lives of their children and grandchildren, the president said.

In an inauspicious start to his first diplomatic shuttle of 2010 after a dozen fruitless visit last year, Mitchell flew into a war of words with each side accusing the other of cynicism.

The U.S. envoy said before talks with Israeli President Shimon Peres that he recognised the complexities and difficulties of pursuing Middle East peace, but made no comment on the sour rhetoric that greeted him.

CONFIDENTIAL

Chief Palestinian negotiator Saeb Erakat said Israeli Prime Minister Benjamin Netanyahu had on Wednesday imposed further conditions on negotiations and announced Israel's intention to continue its occupation of the West Bank whatever happens.
Benjamin Netanyahu has said 'No' to a settlement freeze, 'No' to sharing Jerusalem, 'No' to the 1967 borders, 'No' to the rights of Palestinian refugees. Now he wants to retain the Jordan Valley, Erekat said in a statement.

He was referring to a comment by Netanyahu that Israel would retain military control around any future Palestinian state that included the West Bank.

We had hoped to hear a clear commitment to negotiations without preconditions. What we got instead was Mr Netanyahu again trying to dictate their terms and preempt their outcome, Erakat said.

Addressing the foreign press late on Wednesday, Netanyahu attacked the Palestinian leadership for rejecting U.S. calls to relaunch negotiations suspended for over a year.

The Palestinians have climbed up a tree, he said. And they like it up there. People bring ladders to them. We bring ladders to them. The higher the ladder, the higher they climb.

Mitchell, as usual, said little and there was no immediate clue as to whether the public rhetoric might mask a more positive atmosphere in closed-door talks, first with Israelis in Jerusalem and then on Friday with the Palestinians in Ramallah.

Critics said Israel had placed another obstacle in Mitchell's path by agreeing to upgrade to university status a college built in a Jewish settlement in the West Bank.

The decision by Defence Minister Ehud Barak, formalising a 2005 cabinet ruling, coincided with the envoy's visit. Erekat said it was part of the same policy of dictation rather than negotiation.

Every time Senator Mitchell comes to the region, they greet him with such policies, Erekat added.
Israel plans to keep the Ariel settlement under any peace deal to create a Palestinian state. Palestinians acknowledge some settlements could be annexed in return for land elsewhere.

WEAKER PARTNER

Diplomats say Mitchell seems to be seeking a face-saving way for Palestinian President Mahmoud Abbas to drop his insistence that Netanyahu must stop all settlement building in the West Bank and East Jerusalem before negotiations can be resumed.

Netanyahu's right-wing coalition got off to a rough start 10 months ago with the Obama administration, rebuffing Washington's call for a total halt to Jewish settlement building.

When Mitchell first visited, the Israeli leader was refusing even to talk about establishing a Palestinian state. But last June he embraced the two-state solution and in November he ordered a partial 10-month halt to settlement building.

Western diplomats say Washington now seems increasingly frustrated with Abbas. One, speaking privately, said Abbas as the weaker partner was now the focus of U.S. efforts.

There was an implicit threat of cuts in U.S. aid to the West Bank if Abbas held out against resuming talks, he said.

Abbas hinted last week at a possible way out of the impasse, if Washington framed the talks in such a way as to set an endgame, with the goal of a Palestinian state within a couple of years, or to define the parameters of the deal.
But Israel says that would prejudge the negotiations.

(Additional reporting by Tom Perry and Allyn Fisher-Ilan. Editing by Alastair Macdonald and Paul Taylor)

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