Palestine has rejected an Israeli proposal to renew a moratorium on settlement construction, plunging frozen peace talks between the two sides into ever greater uncertainty. Benjamin Netanyahu, the Israeli prime minister, had offered to extend a partial freeze on Jewish building in the West Bank, but only in exchange for Palestinian recognition of Israel as a Jewish state. Within minutes of the proposal being made public, Palestinian officials had rejected it out of hand. The offer will be seen by some observers as unrealistic from the outset. The Palestinian Authority, while acknowledging Israel's right to exist, has long resisted calls to recognize it as a Jewish state, saying such a move would discriminate against Israel's large Arab minority and prejudice negotiations over the fate of millions of Palestinian refugees.