Israeli PM defies US on settlements freeze

JERUSALEM (Reuters/AFP) - Hawkish Israeli Prime Minister Benjamin Netanyahu on Sunday said Israel will continue to expand settlements in the occupied West Bank despite calls by main ally the United States to stop.
He also referred to a Palestinian state for the first time since re-assuming his post on March 31, but stopped short of backing the principle that is the cornerstone of international Middle East peace making efforts.
Clearly we need to have some reservations about a Palestinian state in a final status agreement, he told the weekly cabinet meeting, the first since his first official meeting with US President Barack Obama in Washington.
These things were voiced clearly before the president in Washington, Netanyahu said. When we reach an agreement on substance, we will reach agreement on terminology.
He stopped short, however, of backing the concept of the Palestinian state, a bedrock principle of international Middle East peacemaking efforts to which Israel engaged under the international 2003 roadmap plan.
Netanyahu rebuffed US calls to impose a freeze on all settlement activity in the occupied West Bank, setting the stage for friction with President Barack Obama.
We do not intend to build any new settlements, but it wouldnt be fair to ban construction to meet the needs of natural growth or for there to be an outright construction ban, Netanyahu told his cabinet, according to officials.
Obama was expected to prod Netanyahu and Palestinian President Mahmoud Abbas to resume long-stalled peace talks during a major speech in Cairo early next month.
Abbas has ruled out restarting those talks until Netanyahu commits to a two-state solution and halts settlement expansion.
Earlier, Israels ultra-nationalist Foreign Minister Avigdor Lieberman ruled out a return to Israels pre-1967 war borders as its largely right-wing cabinet rebuffed calls to remove Jewish settlements built on Palestinian land.
A return to the borders of 67 today, as we are being pressured to do, would not end the conflict, would not guarantee peace or security, Lieberman told reporters ahead of the government meeting.
It would simply move the conflict to within the 67 borders, he said, referring to Israel, as the cabinet met for the first time since Prime Minister Benjamin Netanyahus talks with US President Barack Obama in Washington. On Sunday, most ministers in the right-leaning cabinet criticised the idea of dismantling any settlements, including so-called outposts - those the Israeli government itself considers illegal.
Lieberman said that dismantling the outposts should come in the framework of the international 2003 roadmap for Middle East peace, a step-by-step plan that foresees the creation of a Palestinian state.
Defence Minister Ehud Barak, whose Labour party is the most liberal member of the Netanyahu cabinet, backed the idea of removing outposts, but spoke of 22 such structures - a number several times lower than that of watchdog groups.
We should deal with the remaining 22 (outposts) in a responsible and correct way, Barak said.
First by talking and if that doesnt work then unilaterally.