German Chancellor Angela Merkel on Tuesday backed Palestinian President Mahmoud Abbas' call for an end to Israeli settlement policy in the West Bank so as to reactivate the stalled Middle East peace talks.

Abbas' visit to Berlin formed part of his international tour aimed at securing support for a United Nations' vote to condemn the Israeli settlement policy and to call on Israeli Prime Minister Benjamin Netanyahu to cease the policy.

"I am critical of the settlement policy," said Merkel at a joint press conference with Abbas.

The chancellor described the building of the settlements "as counterproductive" in the push to create a two-party state solution to the Israeli-Palestinian conflict.

However, Merkel stopped short of saying whether Germany would back a Palestinian-proposed UN resolution.

The German chancellor also reacted cautiously to a French initiative to host an international Middle East peace conference in the coming months.

"Of course it must be a broad initiative including the participation of all the major players," said Merkel.

On Monday, during a visit to Moscow, Abbas won the backing of Russian President Vladimir Putin for the peace conference.

The United States vetoed in 2011 a similar UN resolution also condemning Israeli's settlement policy.

But speaking at his press conference with Merkel, Abbas said that he was again pressing for a UN resolution "in the hope that it can convince Prime Minister Netanyahu to end the policy and to pave the way for a two-state solution."

He went on to say: "We don't have any other way."

Palestinian Finance Minister Shukri Bishara, meanwhile, was in Brussels to attend talks by a donor coordination group about the state of the Palestinian economy and its reform progress.

The Ad Hoc Liaison Committee (AHLC), which has existed since 1993, is meant to support institution-building in preparation for Palestinian statehood and to help preserve the vision of a two-state solution.

"We are concerned that these days we are seeing more and more of a one-state reality developing on the ground, and it is really important to break the impasse and get back to a real political process," Norwegian Foreign Minister Borge Brende, who chairs the AHLC, told journalists in the Belgian capital.

"The developments on the ground, including [Israeli] settlement expansion, fundamentally challenge the viability of a two-state solution and are also obstacles to the Palestinian economic development," EU foreign policy chief Federica Mogherini added, speaking of "unacceptable episodes of violence."

"The EU recognizes Israel within its pre-1967 borders, whatever the government's claims on other areas, until a final settlement is concluded," Mogherini said.

The statement came two days after Netanyahu proclaimed: "The Golan Heights will forever remain in Israel's hands."

In 1967, Israel captured from Syria part of the rocky plateau that also borders Lebanon and Jordan. It annexed the territory in 1981, in a move that was not internationally recognized.

Brende said the AHLC talks served to remind donors to fulfill financial pledges made for the reconstruction of the Gaza Strip in the wake of the coastal enclave's 2014 war with the Israeli military.

The World Bank warned on Monday that international donors were failing to meet their 3.5 billion dollars in pledges, with only 1.4 billion dollars disbursed so far.

"Even if there has been progress in Gaza, there is still a job to do when it comes to rebuilding," Brende noted.

The AHLC also underlined the importance of "sound fiscal policy" on the Palestinian side and the need for Israel to allow them to create revenue-generating measures, Brende said.

But he also cautioned that any economic measure discussed on Tuesday "cannot substitute the responsibility of the parties to resolve the conflict."

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