Venezuelan President Hugo Chavez on Friday charged that Israel aims to "terminate the Palestinian people" and said he backs the establishment of Jerusalem as capital of an independent Palestinian state.

"We .. are on the side of the Palestinian people's memorable struggle ... against the genocidal state of Israel that knocks down, kills and aims to terminate the Palestinian people," Chavez told visiting Palestinian President Mahmoud Abbas.

"We reiterate ... our greatest commitment and our greatest solidarity ... for the creation of an independent Palestinian state with the holy city of Jerusalem as its capital," he added during Abbas' first state visit to the country.

Chavez gave no details to support his charge that the Israel sought to eliminate the Palestinian population.

Socialist Chavez is a harsh critic of both Israel and the United States. In January, Venezuela cut diplomatic relations with Israel over the Israeli offensive in Gaza of nearly a year ago, which Chavez called a "Palestinian holocaust."

Abbas met on Friday night with Chavez, who has stepped squarely into Middle East politics this week by hosting both the Palestinian leader and Iranian President Mahmoud Ahmadinejad.

During their meeting the Palestinian leader dismissed an Israeli plan to temporarily halt new construction of West Bank settlements as insufficient on Friday, saying Prime Minister Benjamin Netanyahu chose occupation rather than peace.

The Palestinian president said that "we can't accept the current Israeli government's concept for the negotiations."

"We don't have any condition to restarting negotiations except the commitment of the two sides to the foundations of the peace operation according to the road map, and especially stopping the expansionist activities of the Israelis," Abbas told lawmakers, speaking through an interpreter.

He said Wednesday's announcement by Prime Minister Netanyahu of a 10-month halt to new construction in West Bank settlements "didn't bring anything new because the occupation is going to continue in the West Bank and in Jerusalem."

"The Israeli prime minister had to choose between peace and occupation." Abbas said. "Lamentably, he chose occupation."

Abbas thanked the Chavez government for its support and said: "We're all on the same path."

During their meeting at the palace, Chavez presented his guest with an olive branch and a gold-plated replica of a sword that once belonged to 19th-century independence hero Simon Bolivar - Venezuela's most revered founding father.

"We want peace," Chavez said, then hugged Abbas. "May this sword never need to be unsheathed."

Abbas earlier visited Brazil, Argentina, Chile and Paraguay to build support for efforts toward a Palestinian state.

Latin American leaders backed his calls for Israel to halt settlement construction and also to guarantee that future borders are based on lines that existed before Israel captured the West Bank and East Jerusalem in the 1967 Six-Day War. Netanyahu says such matters must be resolved in negotiations.

During Wednesday's visit by Iran's Ahmadinejad, Chavez denounced Israel as a murderous arm of the Yankee empire.

Chavez has been strengthening ties with Israel's adversaries while trading verbal barbs with President Shimon Peres, who predicted last week in Argentina that the people of Venezuela and Iran will soon get rid of their leaders.

"They won't hold, not because any of us is going to kill them; their own people are getting tired of them," Peres said.

Chavez interpreted that as a threat. "The president of Israel comes here to South America, and he immediately opens fire against us and against me saying I'm going to disappear soon," Chavez told reporters Wednesday. "Well, let's see who disappears first."

Peres spokeswoman Ayelet Frisch has denied the Israeli president threatened anyone, saying "he meant Venezuelans and Iranians will replace their leaders by democratic means."

Abbas told Venezuela's National Assembly that the long history of Mideast negotiations has shown in the past that Israel doesn't want peace. He compared the barrier of walls and fences separating Israel from Palestinian areas to the Berlin Wall.

"The Palestinian people, like the rest of the peoples of the world, want to live free, peacefully, independent," Abbas said. "When is the world going to hear us?"

Chavez has repeatedly condemned Israel as a genocidal government, though he has also assured Jews living in Venezuela he wants to maintain good relations with them.

A leading Jewish community group, that Venezuelan Confederation of Israelite Associations, criticized the government's warm reception of Ahmadinejad this week.

An international Jewish rights group, the Los Angeles-based Simon Wiesenthal Center, demanded on Thursday that the Organization of American States investigate what it called Venezuela's role in promoting terrorism, condemning Chavez's praise of Carlos the Jackal - the imprisoned Venezuelan notorious for a series of Cold War-era bombings, assassinations and hostage dramas.

Chavez lauded Carlos - whose real name is Ilich Ramirez Sanchez - last week as a revolutionary fighter who aided the cause of the Palestinians.

Ramirez is serving a life sentence in a French prison for the 1975 murders of two French secret agents and an alleged informant. He also has been linked to the 1976 hijacking of an Air France jet en route to Uganda, as well as bombings in France.

Shimon Samuels, the Simon Wiesenthal Center's director of international relations, called Chavez's remarks an abominable message condoning violence. "He prefers to put himself on the side of the murderers," Samuels said.