Quartet urges Israel to halt settlements and Palestinians to 'condemn terrorism'

Israel should stop building settlements and the Palestinians should cease incitement to violence, the Middle East diplomatic quartet said in a much-awaited report on Friday aimed at reviving peace talks.

The United States, European Union, Russia and the United Nations - which comprise the quartet - said settlements, demolition of Palestinian homes and Israeli confiscation of land were "steadily eroding the viability of the two-state solution."

"Israel should cease the policy of settlement construction and expansion, designating land for exclusive Israeli use, and denying Palestinian development," said the report.

The report's findings and recommendations are to serve as the basis for reviving the Israeli-Palestinian peace process that has been frozen since a US initiative collapsed in April 2014.

In their first response, the Palestinians expressed disappointment after the quartet criticised both sides and called a meeting for Sunday to discuss whether to implement the findings.

"It does not meet our expectations as a nation living under a foreign colonial military occupation," said senior Palestinian official Saeb Erakat, charging that the report "attempts to equalise responsibilities between a people under occupation and foreign military occupier."

Israeli Prime Minister Benjamin Netanyahu rejected the call for his country to halt settlement construction and said the report would diminished chances for a process leading to Palestinian statehood.

The report "perpetuates the myth that Israeli construction in the West Bank is an obstacle to peace. When Israel froze settlements, it did not get peace," a statement from Netanyahu's office read.

There has been growing alarm that ongoing violence and the construction of Jewish settlements on land earmarked to be part of a future Palestinian state are killing off prospects for a deal.

On Friday, two Palestinians and an Israeli were killed in a series of attacks and clashes in the West Bank, the latest uptick in a nine-month wave of violence.

"The Palestinian Authority should act decisively and take all steps within its capacity to cease incitement to violence and strengthen ongoing efforts to combat terrorism, including by clearly condemning all acts of terrorism," said the quartet.

The report was released after several delays that diplomats attributed to difficult negotiations between the United States and Israel over the issue of settlements.

"We really are concerned that if there aren't significant changes, it will risk entrenching the one-state reality, and that will not be to the benefit of either side," said a senior State Department official in Washington.

Since the beginning of the Oslo peace process in 1993, the settlement population has more than doubled, with a threefold increase in so-called Area C - the most sought-after land in the West Bank, said the report.

"This raises legitimate questions about Israel's long-term intentions, which are compounded by the statements of some Israeli ministers that there should never be a Palestinian state," it added.

There are currently at least 570,000 settlers living in the West Bank and East Jerusalem, which the Palestinians hope to make the capital of their future state. The United Nations has said settlements are illegal.

Among the 10 recommendations outlined in the report, the quartet urged Israel to lift the blockade of Gaza and called for restoring Palestinian Authority control over the Hamas-ruled Gaza Strip.

In an interview with the AFP news agency, UN Mideast envoy Nickolay Mladenov said he hoped the findings would prompt both sides and world leaders to take action to revive the peace process.

"Certainly I would hope that this report would serve as a wakeup call," he said ahead of the report's release. "We can't leave this the way it is. We simply can't."

Mladenov sidestepped questions about prospects for relaunching peace talks and argued that a return to negotiations was the only course of action.

"Endless occupation is a recipe for disaster" that will lead to a "perpetual lack of security and violence," he told AFP.

EU foreign policy chief Federica Mogherini and UN Secretary-General Ban Ki-moon urged Israel and the Palestinians to follow the recommendations.

Mogherini said "we need the political leaders to show their commitment, and implement the recommendations of the report in full."

French Foreign Minister Jean-Marc Ayrault said the report "reinforces" plans for a Paris peace conference later this year.

But a senior US official, speaking to AFP on condition of anonymity, said that chances for peace were slipping away.

"Although leaders on both sides profess support for the two-state solution, if they continue on the current course, this prospect will be increasingly remote," he said.

"We really are concerned that if there aren't significant changes, it will risk entrenching the one-state reality, and that will not be to the benefit of either side."