msnbc.com news services
updated 3/11/2010 7:46:49 AM ET 2010-03-11T12:46:49

The Palestinians threatened Thursday to pull out of U.S.-mediated peace talks with Israel before negotiations have even started.

The two sides agreed this week to resume indirect talks through a U.S. mediator.

But the Palestinians said Israel's plan to build 1,600 new homes in disputed East Jerusalem made it difficult to return to the negotiating table.

Israel announced the construction plan earlier this week, marring a visit by Vice President Joe Biden and drawing harsh criticism from Washington.

'Not ready'
Palestinian President Mahmoud Abbas told Arab League Secretary General Amr Moussa on Wednesday that he had decided not to enter the talks for now. The Arab League had endorsed a four-month framework for the U.S.-mediated negotiations.

"The Palestinian side is not ready to negotiate under the present circumstances," Moussa said in Cairo.

An aide to Abbas said the Palestinians wanted U.S. pressure on Israel to reverse the settlement expansion decision, which Israeli officials said was badly timed, but would not be canceled.

"What is required is that when (U.S. envoy George) Mitchell comes back ... he is supposed to succeed in revoking the Israeli settlement decisions in East Jerusalem in order to give an opportunity to launch the indirect talks," said the aide, Nabil Abu Rdainah.

In a speech at Tel Aviv University on Thursday, Biden said peace with the Palestinians was "profoundly" in Israel's interests.

Video: Biden in Israel He said an end to the conflict would restore to the Palestinians "the fundamental dignity and self-respect that their current predicament denies them."

Biden said Palestinians had misunderstood Israel's announcement of the settlement plan, thinking that building would begin immediately.

With no construction scheduled for now, he said, negotiators would have time to "resolve this and other outstanding issues".

"The most important thing is for these talks to go forward and go forward promptly and go forward in good faith," Biden said.

"We can't delay because when progress is postponed, extremists exploit our differences."

Biden also had warm words of praise for the Jewish state, saying the U.S. has "no better friend."

But he added said "only a friend can deliver the hardest truth."

Israel considers all of Jerusalem its capital, a claim that has not won international recognition. Palestinians want East Jerusalem to be the capital of the state they hope to establish in the West Bank and Gaza Strip.

"Jerusalem is the capital of Israel and construction there will be carried out like in Tel Aviv or any other city — in every part of Jerusalem according to the plans," Israeli Cabinet Secretary Zvi Hauser told Israel Radio.

Asked about a report in Israel's Haaretz daily that 50,000 more homes were being planned for Jerusalem, he said: "I repeat, construction in Jerusalem will continue in all its stages.

"Jerusalem is a big city. It is a city that has to grow."

The Associated Press and Reuters contributed to this report.

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