Brown Urges Israel to Stop Settlers Blocking Peace

Gordon Brown has called for an end to the "blockage" caused by Israeli settlements on occupied Palestinian land to make 2009 the "year of peace" in the Middle East. He urged Barack Obama to build on an Arab initiative to end the conflict.

The prime minister used a Palestinian business conference in London to highlight the settlement issue as Salam Fayyad, his Palestinian counterpart, warned that Israeli policy must change if there is to be any prospect of a viable, two-state solution.

Brown's remarks underline a growing international emphasis on settlements amid hopes for movement when the new US administration takes office. But those hopes are already clouded by the prospect of the rightwing Likud party winning the Israeli election in February.

Fayyad said he found it "devastating" that Israelis were not even debating the settlement issue. Palestinian support for his dual policy of reform and negotiation would collapse if prospects for a workable deal faded away, he added.

He dismissed as "naive" calls by the Likud leader, Binyamin Netanyahu, for an "economic solution" to the conflict as polls show Netanyahu ahead of the Kadima party's Tzipi Livni. Policy towards settlements will be a "litmus test of seriousness" for Obama, he predicted. George Bush gave Israel the go-ahead to keep settlements beyond the 1967 borders.

Fayyad criticised the EU for not making a key agreement with Israel last week conditional on a change of policy. "It is of critical importance that settlement activity stop and stop promptly," he said. "The one issue that really has the greatest bearing on a two-state solution is not a matter of public debate in Israel."

Fayyad, 56, has served as interim prime minister under President Mahmoud Abbas since the Hamas takeover of the Gaza Strip in June 2007. A former World Bank economist, he is highly regarded for having launched economic and security sector reforms, though these are confined to the West Bank. Gaza, home to 1.5 million Palestinians, remains under siege.

Yesterday, Israel released 224 Palestinian prisoners as a gesture to Abbas, who greeted each in person at his Ramallah headquarters. The IMF and the World Bank, backed by Quartet envoy Tony Blair, appealed to Israel to lift restrictions on the transfer of cash to banks in the Gaza Strip, saying these were making it harder for Gazans to cover basic needs.

Fayyad refused to endorse Livni over Netanyahu but said in a reference to the Likud leader: "Ours is a political conflict, not an economic one. Given my background there is no way I would say economic development is unimportant. But to think it is a substitute for the heavy lifting that has to occur on the political track is naive. Economic peace won't cut it."

Fayyad called on the international community to demand greater accountability, having invested record sums in Palestinian development since the 1993 Oslo agreement but seeing no progress since the Annapolis summit a year ago.

"Settlement activity that was supposed to stop completely after Annapolis has accelerated by every indicator."

Land confiscations and the "separation wall" - seen by Israel as a defence against suicide bombers but by Palestinians as a land grab - were casting doubts over the viability of a Palestinian state.

"I do not know when this conflict is going to be resolved. I care more about whether sufficient effort is being made to ensure that the requirements of success are being taken care of.

"Our program is to end the occupation and have our state. But we need to build strong institutions and a functioning economy, even under occupation. We cannot wait until it ends. With each passing day that settlement activity continues, more people will question this doctrine. We need to be assured that when we are done there is going to be room for the independent, sovereign, viable Palestinian state. Otherwise the charge is going to be that we are not engaging in an effort to end the occupation but [to] make it work better or to beautify it."

Fayyad said he was open to dialog with Hamas but regretted it had failed to attend reconciliation talks in Cairo.