Thousands of new homes in the West Bank have already been planned
Diplomats are seeking a last-minute deal as a 10-month Israeli ban on settlement-building winds down, putting Middle East peace talks at risk.
In New York, Israel’s Defence Minister Ehud Barak told the BBC he feared the freeze would not be renewed on Sunday.
Palestinians have said they could leave the recently resumed peace talks if Israel does not extend its ban.
Settlers in the West Bank are preparing to resume construction late on Sunday if no deal is reached on an extension.
Israeli-Palestinian peace talks resumed in September after a 20-month hiatus.
But no agreement has yet been reached on the key issue of Israel’s settlements – which Israel says are no bar to talks – despite intensive efforts from US negotiators.
Speaking to the BBC’s diplomatic correspondent Bridget Kendall, Mr Barak said he was heading back to Israel to try to convince members of the Israeli government of the need for a compromise, but that he was not confident of success.
However, he was more upbeat on the prospects for the peace talks, suggesting there was a 50% chance of reaching a deal with the Palestinians about the settlement moratorium.
The chances of the peace process continuing nonetheless were better than even, Mr Barak said.
In a speech on Saturday to the United Nations General Assembly, Palestinian leader Mahmoud Abbas said Israel must choose between peace and the continuation of settlements.
Palestinians were willing and ready to reach a comprehensive and just peace agreement with Israel, Mr Abbas told the assembly, declaring that their “wounded hands” carried an olive branch to the Israelis.
Abbas insisted Israel must stop all settlement-building
Mr Abbas said the Palestinians would make every effort to reach a peace deal with Israel within one year.
He also criticised Israel, which he said had a “mentality of expansion and domination” and continued to blockade the Gaza Strip and imprison Palestinians.
However, the BBC’s Bridget Kendall, in New York, says Mr Abbas stopped short of publicly threatening to withdraw from talks with Israel if the moratorium is not extended.
It seems likely that a frantic search for a compromise is still going on behind the scenes, she adds.
Israel’s 10-month freeze on West Bank settlement-building expires at midnight local time on Sunday (2200 GMT).
Mr Abbas didn’t sound like a leader about to walk out of major international negotiations.
But nor did he commit himself.
More likely, the frantic behind-the-scenes search for a compromise continues.
President Abbas met Hillary Clinton last night and there has been talk of another meeting today with US Middle East peace envoy George Mitchell.
Senior Israelis are apparently in New York and White House officials say President Obama is standing by in Washington.
The US president staked his diplomatic reputation on driving this peace initiative forward and he will not want it to collapse now.
So it seems likely that Washington is pulling out all the stops in an attempt to broker an 11th-hour deal.
Right-wing politicians in Israel are calling for a swift resumption of construction, and are backing settlers’ plans to resume building as soon as possible.
“The building needs to restart – there are some 2,000 (housing) units that are already approved,” Sport and Culture Minister Limor Livnat, a member of Prime Minister Benjamin Netanyahu’s Likud party, told the AFP news agency.
At least one other pro-settler Likud MP, Danny Danon, plans to attend a symbolic ground-breaking ceremony at the settlement of Revava on Sunday, his office said.
“Our policy now is to resume a natural pace of building,” said Naftali Bennett, director general of the settlers’ organisation, the Yesha council.
However, any resumption of construction is likely to be small in scale, correspondents say, as most projects will require approval from Israel’s defence ministry.
On Thursday, US President Barack Obama urged Israel to extend its moratorium, saying it had “made a difference on the ground, and improved the atmosphere for talks”.
More than 430,000 Jewish settlers live in the West Bank and East Jerusalem.
The international community considers the settlements illegal, although Israel disputes this.
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