Mediators await Netanyahu speech, hoping for change

By Dan Williams

JERUSALEM (Reuters) - Israeli Prime Minister Benjamin Netanyahu is to deliver a major policy speech on Sunday that Western power-brokers hope will make a clear commitment to pursue peace with the Palestinians.

A senior U.S. official said Netanyahu told U.S. envoy George Mitchell this week what he planned to say in the speech and that it was "not adequate" to satisfy Washington, who is pushing for an immediate resumption of talks on Palestinian statehood.

The official was quoted on Friday by participants at a meeting this week of the so-called Quartet of Middle East mediators.

Netanyahu's refusal to declare a building freeze in Jewish settlements in the occupied West Bank and to endorse the goal of establishing a Palestinian state -- both set out in a 2003 peace "road map" -- has opened a rare rift in U.S.-Israeli relations.

Anxious to preserve the alliance but also beholden to his fractious and right-leaning governing coalition, Netanyahu has spoken of stop-gap proposals such as Palestinian self-government shorn of sovereign powers like the right to set up an army.

The Palestinians, having won limited autonomy under 1993 interim accords, insist on full statehood. Yet theirs is now a divided polity, with Hamas Islamists who reject coexistence with the Jewish state in control of the Gaza Strip since 2007.

U.S. President Barack Obama says containing Iran's nuclear aspirations -- which Israel considers a major threat -- would be helped by progress toward a Palestine deal.

An Israeli official said Netanyahu was still putting final touches to the speech which would "present a vision of moving forward in the peace process with the Palestinians".