Amr Moussa AP October 8, 2010
Arab League Chief Amr Moussa speaking to reporters in Sirte, Libya on October 8, 2010 ahead of a one-day League summit. Photo by AP
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Diplomats say some Arab countries are proposing that Palestinian President Mahmoud Abbas return to indirect negotiations to avoid a total breakdown of Mideast peace talks.

The proposal comes as Arab League leaders met in Libya on Friday amid a crisis over Israel's refusal to extend a slowdown in settlement construction in the Palestinian territories.

Arab foreign ministers met ahead of a summit on Saturday. A resolution to call off the talks would be a critical setback. The diplomats described the proposal on condition of anonymity because they weren't authorized to release the information.

Arab League Secretary General Amr Moussa said that peace talks between Israel and the Palestinians were not bearing fruit, but that Arab leaders were not yet ready to recommend abandoning them.

He said Arab foreign ministers meeting in the Libyan town of Sirte would begin drafting alternatives for the peace process because the current round of talks had stalled.

"We will meet to formulate the beginning of alternatives within the framework that the negotiations are not bearing fruit," Moussa said after a meeting of the Arab League's peace process follow-up committee.

"There are no talks at the moment because the position of the Israelis is very, very negative. They are not cooperating in the negotiations," Moussa said.

Moussa explained that the committee was to meet the Palestinian delegation on Friday night but would not advise Abbas what he should do next.

Abbas' spokesman Nabil Abu Rdainah said Abbas told U.S. Secretary of State Hillary Clinton in a telephone conversation on Thursday that "Israel must fully stop settlement activities so that the peace process can succeed."

"The Americans told us that they are continuing with their efforts with Israeli government. We are waiting to see the result of these efforts," Abu Rdainah added.

Launched in Washington on Sept. 2, the direct peace talks veered into a dead end on Sept. 26 when Prime Minister Benjamin Netanyahu refused to extend the 10-month halt to settlement construction he had announced last November.

Abbas has said he wants to go on negotiating but cannot unless the building of new homes is frozen for "three to four months more to give peace a chance".

"The Palestinians waited nine months and more" to agree to direct talks," Netanyahu said on Thursday. Then they broke a promise by "putting forth preconditions" right at the start.

He has described his two meetings with Abbas so far as "positive". U.S. envoy George Mitchell has also sounded upbeat about the prospects of a Middle East peace deal within one year, as foreseen by U.S. President Barack Obama.