Israel PM offers to extend settlement restrictions

JERUSALEM - Israeli Prime Minister Benjamin Netanyahu said Monday for the first time that he would extend the settlement restrictions in the West Bank - if the Palestinians recognize Israel as the Jewish national homeland.

The idea, while innocuous to Israel's supporters, is widely seen as undermining the rights of Arab Israelis, and was immediately rejected by the Palestinians. But it could signal that Netanyahu is willing to bend and save a U.S.-led peace effort in exchange for another concession.

The expiration of Israel's 10-month moratorium on new settlement building two weeks ago thrust the month-old U.S.- led peace negotiations into crisis. The Palestinians are refusing to continue negotiating as long as settlement building continues, but Netanyahu has insisted the curb on construction was a one-time gesture.

The United States has been scrambling for weeks to find a creative way out of the quagmire and has put heavy pressure on Netanyahu to extend the slowdown, while offering a slew of incentives.

In a policy speech marking a new session of parliament, Netanyahu offered his own formula to move forward. "If the Palestinian leadership would say unequivocally to its people that it recognizes Israel as the national homeland of the Jewish people, I will be willing to convene my government and ask for an additional suspension," he said. He was heckled by some lawmakers.

"As the Palestinians expect that we will recognize a Palestinian state as their national homeland, we are entitled to expect that they will recognize Israel as our national homeland," he said.

Netanyahu has made similar demands in the past, though he has never explicitly linked it to the settlement issue. On Sunday, Netanyahu's cabinet passed a bill that would require non-Jewish immigrants to pledge allegiance to the "Jewish and democratic" state of Israel in order to receive citizenship. The move is widely seen as undermining the rights of Israel's Arabs who make up a fifth of Israel's 7.5 million people.

The Palestinians also refuse to accept Israel as a Jewish state, saying it violates the rights of millions of Palestinian refugees scattered around the world. Instead, they say it is sufficient that they recognize Israel's right to exist.

Over the weekend, the 22-member Arab League gave the Palestinians another month to reach a compromise.