Abbas told Arab leaders at the summit in Libya that he does not expect Israel to budge on the settlement issue [AFP]

Arab leaders have concluded two days of meeting in the Libyan coastal city of Sirte, agreeing to adopt a final declaration, but failing to address key Arab issues.

The Arab League foreign ministers initially planned to discuss two items during the summit - reforms to the Arab League and a proposal to create an "Arab neighbourhood" of countries that would include Iran and Turkey.

In the absence of a consensus on these points, however, the ministers agreed to submit proposals on "the development of joint Arab action" but to postpone the neighbourhood issue until their next summit.

On Friday, the Arab foreign ministers threw their weight behind the refusal of Mahmoud Abbas, the president of the Palestinian Authority, to negotiate with Israel unless it renews restrictions on West Bank settlement construction.

Troubled talks

Abbas sought Arab backing for possible fall back options in case troubled talks with Israel collapse, including urging the US to unilaterally recognise a Palestinian state.

The Arab Summit gave US mediators another month to keep the talks from collapsing, a deadline that comes just after the US midterm elections.

Binyamin Netanyahu, the Israeli prime minister, has rejected any extension, but is considering compromises.

On Saturday, Abbas told Arab leaders that he does not expect Israel to budge on the settlement issue and that in the meantime, opposition to continuing the talks is growing among the Palestinians.

In recent months, some Abbas advisers have floated the idea of asking the United Nations Security Council for a unilateral recognition of a Palestinian state in the West Bank, Gaza and east Jerusalem, territories Israel captured in the 1967 Mideast War.

But Ahmed bin Helli, the Arab League undersecretary-general, said Arab leaders did not immediately respond to Abbas' request, preferring instead to give the US more time to rescue the negotiations.

Analysts predict that Washington would probably veto UN Security Council action.

Palestinian statehood

The US has opposed a unilateral Palestinian declaration of statehood and has blocked efforts at the UN to recognise such a state, sticking to a long-standing policy that statehood should come through negotiations with Israeli.

Washington welcomed the outcome of the Summit and pledged to forge ahead with efforts to keep both sides at the table in talks that began just over a month ago.

They are the first direct Middle East talks in nearly two years, but they quickly faced a huge hurdle with the expiry of a 10-month Israeli moratorium on new construction in illegal West Bank settlements.

The Israeli government had no immediate comment on the Arab League statement.

Direct US-backed negotiations between Israel and the Palestinians began on 2 September, after several months of indirect contacts, then stalled after less than a month over the settlement dispute.

Hillary Clinton, the US secretary of state, and George Mitchell, the US Middle East envoy, called Arab leaders throughout the week, urging them to persuade the Palestinians not to walk away from the talks.

However some Arab leaders, like Bashar Al-Assad, the Syrian president, warned against getting bogged down in details like settlement construction.

"We sometimes forget that the main issue is that Israel is occupying the Palestinian land, now we're just talking about settlements," Al-Assad said.

"This is wrong. We should be talking about returning Palestinian occupied land. When the land is returned the issue of settlements becomes a moot point," he explained.

Support for Sudan

In their final statement, Arab League leaders also voiced their support for Sudan, saying that the League "affirms its solidarity [...] and emphasises the necessity of respecting its sovereignty, territorial integrity and independence, and supports efforts to achieve peace" in the country.

Omar al-Bashir, Sudan's president, is wanted by the International Criminal Court (ICC) for alleged genocide and other crimes in Darfur, the first sitting head of state to face a warrant by the ICC.

He has once again become the focus of the international community, this time ahead of a January 9 referendum in which southerners could opt for independence.

The Arab League also pledged to work closely with the African Union and the UN to help Sudan organise the referendum and ensure that it holds a "peaceful, free, credible and transparent manner".

Source: Agencies