While the Palestinian's have never accepted Israeli settlements,cessation of all settlement building has never been a precondition to talks. Israel had long ago agreed not to build new "settlements" in Judea and Samaria but would continue to add housing units to existing communities.
During the government of PM Ehud Barak, there were direct talks and construction continued in existing communities.
Hillary Clinton first demanded the freeze in 2009 and was quickly backed up by Obama. What the President and his advisers perceived as a minor concession (a settlement freeze including no new housing units in existing communities) was for Israel a grave sacrifice. From their point of view it was if they were telling adults that their children could not purchase a home in their neighborhood.
This was a major error by the Obama administration and it was compounded by their inclusion of Jerusalem in the mix and their constant public berating of the Jewish State turned the Israeli population against Obama. In fact the only thing that Obama's public berating of Israel accomplished is to unite the Israeli populace against him.
Additionally Obama's demand for a freeze broke a US/Israel agreement made during the Bush administration. Obama, through his Secretary of State Ms Clinton, said there was never an agreement between Israel and the US about natural expansion of existing settlements. Elliot Abrams who negotiated the agreement for the United States says Obama's contention is simply not true (diplo-speak for he they are lying).
The Palestinians seized upon the Obama-created issue. Seeing an opportunity to avoid talking, they used Obama’s demands to make a settlement freeze a precondition to further talks, even there were negotiations and construction going on simultaneously before Obama became president.
In August 2009 Prime Minister Netanyahu announced a ten month settlement freeze. It was approved and implemented on November 25, 2009 and ran till September 25, 2010. Despite pressure from the United States, the Palestinians wasted the first 9+ months of the freeze and would not come to the negotiation table till September 2010, three weeks before the freeze ended. A fact lost on the liberal media.
Yet the onus was put on the Jewish State to extend the freeze, the administration did not question the Palestinian Authority’s refusal talk for the first nine months of a ten month freeze.
As the end of the construction halt approached, the US began to negotiate with the Israel to extend the freeze via Hilary Clinton. Based on their experience with the Obama Administration, they demanded that any proposal be presented in writing. In other words, as any oral deal with the Obama administration was worth the paper it was printed on.
The written offer never came and worse yet, the Secretary of State wasn’t negotiating in good faith. Ms Clinton was playing "Bait and Switch."
As Israel waits for a letter clarifying America's guarantees in exchange for a proposed building ban for Jewish residents of Judea and Samaria, a diplomatic source has come forward saying that no such letter is on its way. United States Secretary of State Hillary Clinton misled Prime Minister Binyamin Netanyahu, and contrary to reports, the U.S. does not guarantee an end to the freeze, the source said.That didn't stop Netanyahu from trying to give the Palestinian side an "out." In early October he made a very simple offer to the PA. If you were to recognize Israel as the Jewish State, we will extend the freeze. As reported by Al Jazeera the answer was a resounding no:
The source, a senior diplomat with inside knowledge of Netanyahu's recent meetings in Washington, said Clinton made commitments when talking to Netanyahu, but later slipped out of them by claiming that she had not been speaking on behalf of U.S. President Obama – who, she said in the end, did not give his approval.
Binyamin Netanyahu, the Israeli prime minister, has offered to renew a partial settlement construction freeze in exchange for Palestinian recognition of Israel as a Jewish state.President Obama believes that the unrest in the Middle East, the so called Arab Spring is the perfect opportunity for crafting a peace between the Israelis and Palestinians. But how can he try and make peace if he does not recognize the fact that the Palestinian side refuses to make the most basic of acknowledgments, that Israel is the Jewish State. Until they recognize that fact, it is clear that the Palestinians have no desire to make peace.
He announced the offer on Monday, just three days after the Palestinians and Arab states gave the US a month to persuade Israel to renew a 10-month moratorium on settlement housing starts that expired on September 26.
Netanyahu's proposal met with swift rejection from senior Palestinian officials.
"The whole world holds Netanyahu responsible for what is happening in the region, after he chose to push ahead with the settlement project at the expense of an advance in the peace process. Settlement freeze is a commitment Netanyahu should respect," Saeb Erekat, the chief Palestinian negotiator, told Al Jazeera.
Yasser Abed Rabbo, a senior official of the Palestinian Liberation Organisation, described the settlement issue as "an aggression on Palestinian rights and land".
"What Israel calls itself is an Israeli matter that does not concern us. The two issues are not related," he told Al Jazeera in reference to Netanyahu's condition that Palestinians recognise Israel as a Jewish state.
Nabil Abu Rudainah, the spokesman for Mahmoud Abbas, the Palestinian president, said a return to peace talks required a freeze on settlement building by Israel.
"The issue of the Jewishness of the state has nothing to do with the matter," he told the Reuters news agency.
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