published Jan 25, 2018 12:34:42 PM, by Shannon Pettypiece and David Wainer
(Bloomberg) —

President Donald Trump said in a meeting with Israeli Prime Minister Benjamin Netanyahu that he would cut off funding to the Palestinians unless they agree to resume peace talks.

Trump said at the  World Economic Forum in Davos, Switzerland, that the Palestinians “disrespected us a few weeks ago by not allowing our great vice president” to meet with them. Hundreds of millions of dollars “is not going to them unless they sit down and negotiate peace.”

He made a similar threat on Twitter earlier this month. Trump also said the U.S. is moving its embassy to Jerusalem “ahead of schedule by years,” adding that he expected to open a “small version” of the embassy sometime next year.

The U.S. State Department has reneged on a pledge to contribute $45 million in food aid, health services and other relief promised to Palestinian refugees this month. Vice President Mike Pence traveled to Egypt, Jordan and Israel last weekend, but Palestinian leaders refused to meet with him.

Netanyahu and Trump have found little to disagree on, a contrast with the Israeli leader’s frequent clashes with former President Barack Obama. Trump’s Jerusalem announcement in December angered the Palestinians and jeopardized his own administration’s effort to restart peace talks. He’s also threatened to scrap Obama’s nuclear deal with Iran unless it’s thoroughly revised, an approach the Israeli leader supports.

Earlier this month, Trump issued an ultimatum to other world powers that are party to the Iran nuclear agreement, saying he won’t continue to waive sanctions lifted under the deal unless it’s revised, giving the other signatories less than four months to resolve the dispute. If Trump decides to abandon the agreement, “then we will back you all the way,” Netanyahu said in the meeting.

European leaders have made clear they believe Iran is abiding by limits on its nuclear program set out in the deal.

Syria Presence

Addressing reporters after meeting Trump, Netanyahu said the deal had failed to moderate Iran’s behavior and said many countries shared Israel’s goal of stopping Iranian “aggression” in the region. Netanyahu raised the Iran issue with a succession of European leaders at Davos.

Trump and Netanyahu also discussed the U.S. peace effort, which a White House official said earlier this week had hit “a bump” after Palestinian leaders shunned American envoys to protest Trump’s Jerusalem announcement. The White House still plans to unveil a plan this year that will encompass broader regional diplomatic efforts that include Egypt, Jordan and Saudi Arabia.

Trump told Netanyahu Israel “will pay for” his Jerusalem announcement, an apparent acknowledgment that the Jewish state would have to make concessions in peace talks. Netanyahu said Trump’s Jerusalem step “pushes peace forward.”
‘Off the Table’

The president described Jerusalem’s status as the “hardest subject” in negotiations between the Israelis and Palestinians, and said his announcement “took it off the table; we don’t have to talk about it anymore.”

Palestine Liberation Organization Secretary General Saeb Erekat said Trump’s comments at Davos reinforce the idea that the U.S. can’t be a peace mediator. Taking Jerusalem off the table effectively means taking peace off the table, Erekat said in a statement.

Palestinians see a relocation of the embassy as cementing Israel’s grip on the entire city, part of which they claim for the capital of their own, future state.

‘Slap of the Century’

Netanyahu told reporters that Israel is on board with Trump’s peace push. Later, in a panel discussion with journalist Fareed Zakaria, he said the Palestinians were looking for excuses to avoid serious negotiations, calling on them to “stop kvetching” and return to the table.

Nikki Haley, the U.S. ambassador to the UN, picked up that theme, warning that “peace requires compromise” and Palestinian Authority President Mahmoud Abbas isn’t a leader who can deliver peace.

In an angry speech last week to the PLO Central Council, Abbas assailed the Trump administration’s peace initiative as the “slap of the century,” and said of the U.S. threat to halt funding, “Damn your money.” He asserted that Israel is a “colonial project” that had nothing to do with Judaism.

Abbas rejected any American lead role in peace talks, while reaffirming his commitment to a two-state solution to the conflict.

Trump’s son-in-law and senior adviser, Jared Kushner, and his Middle East envoy Jason Greenblatt have been developing a new peace plan for the Israeli-Palestinian conflict. The proposal is expected to be released early this year, but the administration — and the Israelis and Palestinians — have so far said little about its details.
“It’s a great proposal for the Palestinians,” Trump said. “I think it’s a very good proposal for Israel.”