The prospects of direct peace talks, backed by the United States, between the Palestinians and Israelis hang in a balance as Israel has not extended the 10-month freeze on construction in the West Bank.

On Monday morning, work resumed in the West Bank settlement of Ariel after a ban on construction ended on midnight Sunday. Construction activity, approved before the 10-month freeze, also restarted in three other settlements — Ravava, Yakr and Hashachar.

On Sunday, there were celebrations in two West Bank settlements to mark the end of the freeze. Thousands of campaigners for fresh settlements arrived by buses, released balloons and justified in a raft of speeches, resumption of construction work in territories occupied by Israel since 1967.

Palestinian Authority President, Mahmoud Abbas, has repeatedly stated that negotiations would end if Israeli did not expend the 10-month moratorium. The Obama administration has also urged Israel to extend the freeze, to save the talks from collapsing.

But without extending the freeze, Israel appeared to be looking for a compromise. Israeli media is reporting that Defence Minister, Ehud Barack has returned from the U.S. with a clutch of proposals to break the impasse.

Analysts say that Israeli Prime Minister Benjamin Netanyahu is apparently under pressure from his ultra-right coalition partners, who have vociferously demanded that the freeze should not be expended.

But Mr. Abbas’ credibility is also on line, if he persists with negotiations, without rejecting the resumption of Israeli constructionwork in the West Bank. Mohammed Dahlan, a heavyweight in Fatah, the most influential faction in the Palestine Liberation Organisation (PLO), has already stated his opposition to further talks, if the moratorium does not hold. In a statement, the Popular Front for the Liberation of Palestine (PFLP), the second largest group in the PLO, has also objected to talks if Israeli construction activity in occupied territories revived.

With the threat of talks breaking down looming, Mr. Abbas has told the Arabic daily Al Hayat that he would not take an immediate decision on the talks but consult his Arab League allies on the future course of action. The Arab League summit convenes in Libya on October 4.

On his part Mr. Netanyahu, has spoken twice with U.S. Secretary of State Hillary Clinton, the Israeli daily Haaretz reported. He has also appealed to Mr. Abbas to continue with the dialogue. Besides, he has remained in touch with King Abdullah II of Jordan and Egyptian President Hosni Mubarak.

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