Prime Minister Benjamin Netanyahu, AP, Oct. 11, 2010
Prime Minister Benjamin Netanyahu speaking at the opening of the Knesset’s winter session on October 11, 2010. Photo by AP
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Prime Minister Benjamin Netanyahu has started preparing the ground for a blame game against the Palestinian Authority, as talks with the Obama administration over renewing the settlement freeze appear to be going nowhere.

In his address at the start of the Knesset winter session yesterday, Netanyahu said that a month ago, he told the Palestinians he would extend the settlement construction hiatus if they recognized Israel as the state of the Jewish people. The Palestinians turned him down, he said.

Palestinian officials said they never received such an offer, while American officials declined to address Netanyahu's statements and repeated that they want to see the freeze extended.

Netanyahu presented his proposal to the Palestinians as a serious offer, but it was clear it was a media stunt - Netanyahu and his aides know there is no chance Palestinian President Mahmoud Abbas would accept such an offer.

Until now, Netanyahu had been demanding that the Palestinians recognize Israel as a Jewish state only as part of a final agreement. The Palestinians have said they oppose this, too.

Sources close to Netanyahu admitted yesterday that the proposal he mentioned is no longer on the table because the Palestinians rejected it.

There are talks about a "package deal" that would include Israel relaunching the freeze, but the offers currently on the table are various American proposals, the sources said.

For now, there has been no breakthrough agreement that would enable the direct peace talks between Israel and the Palestinians to restart.

Netanyahu's forum of seven ministers is scheduled to meet tonight in Jerusalem, but it is unclear whether the discussion will address negotiations with the Palestinians.

"Over the past few weeks, I have been trying to find any way possible to ensure that the talks continue," Netanyahu told the Knesset. "I asked myself, 'What could convince Israel's government and citizens that the Palestinians are really willing to live with us in peace?' Such a thing exists. I relayed a message last month through quiet channels, and I am saying it here in public: If the Palestinian leadership says in an unequivocal way to its people that it recognizes Israel as the state of the Jewish nation, I will be willing to bring together my ministers and ask them to approve another limited construction hiatus."

Yesterday, during a meeting of the Likud Knesset faction, MKs Tzipi Hotovely and Danny Danon asked Netanyahu whether he intended to extend the settlement freeze. In a surprising turn, Netanyahu said, "Settlement is important but there are also other important interests that need to be taken into account."

Meanwhile, Palestinian Authority officials rejected Netanyahu's proposal offhand.

Abbas spokesman Nabil Abu Rudeina said that returning to direct negotiations requires a construction freeze, "and the Jewish identity of the state has no connection to the subject."

Similar comments were also made by the head of the Palestinian negotiating teem, Saeb Erekat, who argued that Netanyahu is simply "playing games." Netanyahu never relayed such a proposal to the Palestinian leadership, he said, adding, "He is trying to free Israel from fulfilling its international commitments."

The U.S. administration refused to comment on Netanyahu's statements. A senior State Department official said that the U.S. policy has not changed, and that U.S. President Barack Obama and Secretary of State Hillary Clinton are committed to Israel as a Jewish and democratic state. As for the settlements, the senior official said that the U.S. position is known.

He reiterated that the U.S. would like to see the freeze renewed, and refused to comment further. He vowed to continue working with the two sides to create conditions to enable the talks to continue.

Before Netanyahu took the floor, President Shimon Peres also addressed the Knesset. He was indirectly critical of the Netanyahu government, for the first time since it was formed.

Peres called on Netanyahu to negotiate on borders for a Palestinian state.

"There are skeptics among us and externally, also among our friends, who argue that there is a contradiction between a two-state solution and continued settlement construction," Peres said. "I believe the correct conclusion is to move quickly to an agreed map," the elderly statesman said.