US Secretary of State Condoleezza Rice said today that Israel's continued settlement building was harming peace negotiations with the Palestinians.
At a news conference with Palestinian President Mahmoud Abbas -- who called settlements "the highest hurdle" to a deal with Israel -- Rice said she believed a statehood accord was still possible this year, but would require intensified efforts.
Israel said on Saturday it planned to build 1,300 new homes in the occupied West Bank in an area it considers part of Jerusalem. Palestinian negotiator Saeb Erekat called the move part of "a systematic policy to destroy" the peace process.
Rice said both sides should be trying to build confidence, not undermine it.
Pointing to Israel's settlement policy, she said: "I do believe, and the United States believes, that the actions and the announcements that are taking place are indeed having a negative effect on the atmosphere for the negotiation -- and that is not what we want."
She said construction of Jewish settlements in the occupied West Bank would not pre-determine the future borders of a Palestinian state, frontiers which Washington believes must be negotiated by the two parties.
Asked if she expected Israel to take action to rein in settlement activity, Rice said: "I don't expect, frankly, any blinding breakthroughs."
Rice is on her sixth trip to the region this year to try to nudge both sides toward a peace deal by the end of 2008 -- a goal widely viewed as unrealistic.
"We have a lot of work to do between now and then if we're going to get it done. So I expect an intensification of our efforts," she said.
A senior Palestinian official said that as part of a push for a deal in 2008, Rice proposed holding more trilateral meetings with the chief Israeli and Palestinian negotiators.