U.N.'s Ban urges Israel to change settlement policy

UNITED NATIONS (Reuters) - U.N. Secretary-General Ban Ki-moon called on Israel on Monday to "fundamentally change its policies" on settlements and prove its commitment to a two-state solution to the Israeli-Palestinian conflict.

Addressing a ministerial-level Security Council debate on the Middle East, Ban also demanded an end to Palestinian rocket attacks on Israel and said the Palestinian Authority must develop an effective security structure and state institutions.

But Ban's remarks appeared to focus more on Israel's obligations as he urged the parties and the international community to "kick-start" a fresh attempt to resume stalled Middle East peace negotiations and achieve a settlement.

At the meeting called by Russia, current president of the Security Council, but boycotted by Israel, speaker after speaker affirmed support for a two-state solution in which a new Palestinian state would exist alongside Israel.

New Israeli Prime Minister Benjamin Netanyahu has called for talks with the Palestinians but has not specifically supported a Palestinian state. Netanyahu is to meet U.S. President Barack Obama in Washington on May 18.

Ban referred to a "deep crisis of confidence" among people in the region and a "vortex of hopelessness" in Gaza caused by Palestinian divisions and tensions between Israel and the Hamas militant movement, which controls the territory.

He said Palestinians "continue to see unacceptable unilateral actions" by Israel in East Jerusalem and the West Bank. These included house demolitions, intensified Jewish settlement activity, settler violence and oppressive movement restrictions, all linked to settlements, he said.

"The time has come for Israel to fundamentally change its policies in this regard as it has repeatedly promised to do, but not yet done," Ban said.

"Action on the ground, together with a genuine readiness to negotiate on all core issues, including Jerusalem, borders and refugees, based on Israel's existing commitments, will be the true tests of Israel's commitment to the two-state solution."

'DEEPLY UNACCEPTABLE'

The U.N. chief said "indiscriminate" rocket attacks from Gaza into Israel were "deeply unacceptable, totally counterproductive, and must cease."

But he also said Israel must refrain from using excessive force, as he said it had done during its December-January campaign against Gaza. And he said Israel's continued closure of the Gaza Strip "does not weaken Israel's adversaries in Gaza, but does untold damage to the fabric of civilian life."

Israel currently allows only food and medicine into Gaza. Ban called on the Jewish state to allow in glass, cement and other building materials -- products Israel says Hamas could use for military purposes.

U.S. Ambassador to the United Nations Susan Rice also repeated Washington's call on Israel to end settlement activity, as well as condemning rocket attacks on Israel.

Rice said Jordan could play an important role in Middle East peace efforts. Jordan's King Abdullah said in a British newspaper interview published on Monday that the United States was promoting a "57-state solution" in which the entire Muslim world would recognize Israel.

In a statement, Israel's U.N. Ambassador Gabriela Shalev said her country was not taking part in Monday's meeting because it did not believe Security Council involvement would help and because Israel was conducting a policy review.

Diplomats said Russia had called the meeting, which was chaired by Foreign Minister Sergei Lavrov, to maintain Moscow's role on the Middle East stage. Russia has long been planning a full-scale Middle East conference in Moscow, but it is now not expected until late this year.

(Editing by Will Dunham)