Israel's prime minister emphasized Tuesday that his 10-month freeze on new housing in the West Bank is a one-time measure that will not be extended.
Palestinians had already rejected Benjamin Netanyahu's moratorium as inadequate, because it allows about 3,000 homes already under construction to be completed and does not include Jewish neighborhoods in east Jerusalem, claimed by Palestinians as their future capital. Palestinian President Mahmoud Abbas has demanded a comprehensive freeze before peace talks can resume.
Also Tuesday, Israel sternly warned the European Union against adopting new language that endorses east Jerusalem as the capital of a Palestinian state.
Speaking outside Tel Aviv at nightfall after several minor clashes between government officials and angry settlers in the West Bank, Netanyahu sought to reassure the settlers, who have been among his main backers.
Referring to them as "our brothers and sisters" and calling them "an integral part of our people," he said the moratorium was meant to encourage a resumption of peace talks.
He noted that the Cabinet decision imposing the 10-month halt is a one-time measure. "We will resume building at the end of the freeze," he pledged.
Palestinian negotiator Saeb Erekat rejected Netanyahu's latest statement. "Netanyahu never stopped building settlements so nothing has changed," he told The Associated Press.
The settlement dispute has become the centerpiece of efforts to restart Israel-Palestinian negotiations, frozen for nearly a year. Palestinians charge that expansion of the settlements eats away at the land and resources they claim for a state.
Netanyahu, who belongs to the ideological front that believes Israel has a claim to the West Bank for religious and security reasons, counters that the issue of settlements, like Jerusalem, borders and refugees, should be handled in peace negotiations, not as preconditions for talks.
"The future of the settlements," he said Tuesday, "will be determined only in final status peace negotiations, and not one day sooner."
The EU took a tentative step toward endorsing the Palestinian argument with a draft proposal referring to east Jerusalem as the capital of a state. In the past the EU has said Jerusalem should be shared, and the details should be worked out between the two parties.
Sweden, the current EU president, is floating an initiative, the Israeli daily Haaretz reported Tuesday, and it will seek approval at an EU meeting in Brussels next week.
In Stockholm, officials declined to confirm the proposal. But diplomats in Brussels said privately that Sweden has put the issue up for a debate by the EU governments.
The text, quoted by Haaretz, refers to a "two-state solution with an independent, democratic, contiguous and viable state of Palestine, comprising the West Bank and Gaza and with east Jerusalem as its capital, living side by side in peace and security with the state of Israel."
Although the proposal is unlikely to pass, Israel's Foreign Ministry issued a strongly worded statement urging the EU not to proceed.
"The move led by Sweden damages the ability of the European Union to take a role and be a significant factor in negotiations between Israel and the Palestinians," the statement said.
The dispute over east Jerusalem _ home to Jewish, Muslim and Christian holy sites _ is the most intractable issue in the Israeli-Palestinian conflict.
Israel captured the area in the 1967 Mideast war, immediately annexed it and claims all of Jerusalem as its eternal capital. But the annexation has not been internationally recognized.
AP correspondents Ian Deitch in Jerusalem, Louise Nordstrom in Stockholm and Robert Wielaard in Brussels contributed to this report.