World powers criticise Israel for construction in West Bank, call for peace deal this year.
The Middle East diplomatic quartet on Friday pressed Israel and the Palestinians to seal a peace deal this year and expressed "deep concern" over continuing settlement expansion by the Jewish state in the West Bank.
A ministerial session of quartet members - the United States, Russia, the European Union and the United Nations - ended with a call on the parties "to make every effort to conclude an agreement before the end of 2008".
Quartet members "expressed deep concern about increasing [Israeli] settlement activity, which has a damaging impact on the negotiating environment and is an impediment to economic recovery and called on Israel to freeze all settlement activity".
They also reiterated that the parties "must avoid actions that undermine confidence and could prejudice the outcome of the negotiations".
In August, Israel approved construction of 400 new homes in a Jewish neighbourhood in annexed east Jerusalem and invited bids for construction of another 416 settler homes in the occupied West Bank.
The construction of settlements - viewed as a major obstacle to reaching a peace deal - has nearly doubled since 2007, despite Israel's pledge to freeze such activities, the Israeli watchdog Peace Now said last month.
At a Security Council debate specially convened on the issue, Arab countries earlier Friday slammed Israel over its settlement expansion policy.
"Settlement makes the creation of a viable Palestinian state impossible," Prince Saud Al-Faisal said during the council debate.
"The only path to Israel's security is peace and it is time for Israel to understand that it cannot continue to exempt itself from behaving in accordance to international law," said the Saudi foreign minister, whose country formally called for the debate Monday.
Meanwhile UN chief Ban Ki-moon pointed out that the quartet "noted with appreciation the parties' suggestion to brief the quartet on their ongoing negotiation process with due regard for the confidential and bilateral nature of the discussions".
"The quartet expressed its interest in coordinating such a meeting in the region at a date to be determined," the text said. "We welcome, and we are going to determine the date in the region later, sometime this year."
The quartet also condemned "acts of terrorism against Israelis, including any rocket attacks emanating from the Palestinian territories, and stressed the need for further Palestinian efforts to fight terrorism".
Palestinian president Mahmud Abbas told the council that the Israeli settlement blocs "will not allow for the emergence of a viable Palestinian state because they divide the West Bank into at least four cantons".
"How can I convince my people of the necessity of peace with Israel when settlement construction continues?" he added.
But Israel's new UN Ambassador Gabriela Shalev told council members that while the settlements are a "delicate issue," they "are not an obstacle to peace".
"They have been used here as another instrument to bash Israel instead of addressing the realities on the ground," she added.
"There is much that those in the region can do to support that [peace] process, but it is not about more UN meetings," Shalev said. "It is, first and foremost, about commitment to prepare the people of the region for the price of peace, to accept the true meaning of peace."
In her remarks to the Council, US Secretary of State Condoleezza Rice shifted the focus from the settlement issue and instead urged Arab countries to "consider ways they might reach out to Israel".
She added that the Arab world needed to fully understand that "Israel belongs to the Middle East and will remain" in the Middle East.
French Foreign Minister Bernard Kouchner, whose country currently chairs the European Union, meanwhile restated the EU view that Israeli settlements, "wherever in the occupied Palestinian territories, are illegal under international law".
In Annapolis, Maryland last November, Israel and the Palestinians revived negotiations toward resolving core problems like the status of Jerusalem, the borders of a future Palestinian state and refugees.
The parties set the goal of a peace deal by the end of 2008, but that target is looking increasingly difficult to meet.