U.S. Secretary of State Hillary Clinton says Israeli plans for new settlements near East Jerusalem do not help efforts to bring about a two-state solution to the Palestinian crisis.
Clinton told Israeli officials in Washington that plans for new settlements abutting East Jerusalem "set back the cause of a negotiated peace."
"We all need to work together to find a path forward in negotiations that can finally deliver on a two-state solution. That must remain our goal," Clinton said.
Friday's announcement of 3,000 new homes on Israeli-occupied land is especially contentious as building in the area near East Jerusalem known as E1 could obstruct the ultimate creation of a contiguous Palestinian state because it cuts through the West Bank.
In remarks at a Washington foreign policy forum, Clinton spoke warmly of the longstanding alliance between the United States and Israel and Washington's objection to this week's move by Palestinian Authority President Mahmoud Abbas to increase his group's status at the United Nations to that of a non-member observer state.
"President Abbas took a step in the wrong direction this week," Clinton said. "We opposed his resolution. But we also need to see that the Palestinian Authority in the West Bank still offers the most compelling alternative to rockets and permanent resistance."
She says Palestinian Authority leaders deserve credit for real achievements on the ground -- making their streets safe, overhauling governing institutions and cooperating with Israel to help enhance Israeli security.
"At a time when religious extremists claim to offer rewards in the hereafter, Israel needs to help those committed to peace deliver for their people in the here and now," Clinton said.
When Israeli and Palestinian leaders are ready to return to direct negotiations, Secretary Clinton says President Barack Obama will be a full partner.
She says the United States stand ready to help Israel make more permanent its cease-fire with Hamas forces in Gaza. But that requires the continued cooperation of the new Egyptian president Mohamed Morsi.
"We look to Egypt to intensify its efforts to crack down on weapons smuggling from Libya and Sudan into Gaza," Clinton said. "I am convinced that if more rockets are allowed to enter Gaza through the tunnels, that will certainly pave the way for more fighting again soon."
President Obama made little progress in Israeli-Palestinian talks in his first term. The last high-profile U.S. effort at a negotiated settlement came from former U.S. President George W. Bush who brought the two sides together in a process aimed at a peace treaty by the end of 2008.