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Palestinian PM criticizes Clinton for letting Israel set peace agenda

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But Israeli Prime Minister Benjamin Netanyahu argues that Israel is doing more than ever to help Palestinians in the West Bank: easing travel restrictions and removing checkpoints, fostering Palestinian economic growth, and offering to curtail some settlement construction.

"We are making a focused effort to resume the peace process," Netanyahu said at a cabinet meeting on Sunday, during which he said his policies had led to an "economic boom" for Palestinians. "We are ready to start negotiations without delay."

Never before, Netanyahu says, have there been Palestinian "preconditions" to negotiations. As such, he has portrayed the Palestinians – particularly President Mahmoud Abbas, who refuses to have official talks in the absence of a settlement freeze – as the main stumbling block to progress.

Fayyad pointed out, however, that that is not a new demand – nor a purely Palestinian one; the 2003 road map introduced by the Bush administration insisted on a full freeze in settlement activity, including natural growth. Under former prime minister Ariel Sharon, Israel agreed to implementing that road map, as did the Palestinians, whose obligations under the blueprint included cracking down on extremism. Both accused each other of not living up to their promises.

"It's as if we Palestinians are the only ones that have obligations that need to be observed, even though the road map included a total Israeli settlement freeze," said Fayyad.

Arabs express 'deep disappointment' after Clinton remarks

In addition to presenting an impasse on Israeli-Palestinian talks, US backpedaling on the settlement issue could also stymie the Obama administration's efforts to reach out to Arab leaders and win their support for normalizing ties with Israel.

"I am telling you that all of us, including Saudi Arabia, including Egypt, are deeply disappointed ... with the results, with the fact that Israel can get away with anything without any firm stand... ," Arab League Secretary-General Amr Moussa told reporters at a gathering of Arab foreign ministers in Marrakesh, Morocco.

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