By Wafa Amr

RAMALLAH, West Bank, Dec 10 (Reuters) - Palestinians warned on Monday they might boycott peace negotiations starting this week after Israel defied Washington and other international sponsors of the process by planning new homes on occupied land.

The chief negotiators, former Palestinian prime minister Ahmed Qurie and Israeli Foreign Minister Tzipi Livni, met to prepare the launch of talks on Wednesday. The negotiations, after an often violent seven-year hiatus, follow two weeks after U.S. President George W. Bush hosted a conference at Annapolis.

Senior Palestinian officials said Qurie, insisting Israel honour a pledge renewed at Annapolis to halt settlement activity in the West Bank, demanded it cancel a construction tender, announced just days after the conference. The tender was to build over 300 homes and other units in an existing settlement near Jerusalem on land Israel annexed from the West Bank after it occupied the territory in 1967.

If not, they said, some leaders have proposed a boycott over the development at the site, where the start of building 10 years ago triggered a collapse in peace talks in 1997.

"There's a debate within the Palestinian leadership between those who call for boycotting talks on Wednesday and those who say go, but focus only on demanding a settlement freeze," said Azzam al-Ahmad from President Mahmoud Abbas's Fatah party.

Livni's spokesman said only that the meeting was to prepare discussions on Wednesday between Abbas and Israeli Prime Minister Ehud Olmert.

Israel says the settlement at Har Homa, known as Abu Ghneim by Arabs, is not covered by commitments in the 2003 road map peace plan because it was annexed to Israel.

That annexation is not recognised internationally and Palestinians see building at the site, just north of Bethlehem, as part of Israeli efforts to divide the West Bank in two and encircle Arab East Jerusalem, which Abbas wants as the capital of a Palestinian state in the West Bank and Gaza Strip.

Palestinian negotiator Saeb Erekat told Reuters: "It's putting the negotiations and the peace process in jeopardy this time ... Qurie demanded that Israel revoke the tenders to build in Jabal Abu Ghneim and give peace the chance it deserves."

On Monday, the European Union joined the United States and United Nations in voicing concern about the new building plan.

"May I ... call on the Israeli government indeed to abide by all of its commitments being made before and at Annapolis and also to avoid any action that might put the process of building confidence on both sides into question," EU External Relations Commissioner Benita Ferrero-Waldner said in Brussels.

U.S. Secretary of State Condoleezza Rice, who as architect of the Annapolis conference has invested much political capital in the process for the final year of the Bush administration, said the Har Homa tender "doesn't help build confidence".

U.N. Secretary General Ban Ki-moon said was "not helpful". (Editing by Alastair Macdonald and Matthew Jones)

AlertNet news is provided by