2010-03-28

SIRTE, Libya (Reuters) - Arab states should prepare for the possibility that the Palestinian-Israeli peace process may be a total failure and prepare alternatives, Arab League Secretary-General Amr Moussa said on Saturday.

He did not specify what the alternatives might be.

The troubled Middle East peace process suffered a fresh setback when the Palestinians warned that indirect talks with the Israelis would not take place unless Israel cancelled a decision to build 1,600 new homes in a settlement near east Jerusalem.

Speaking to Arab leaders at a summit of the Arab League in the Libyan town of Sirte, Moussa said the peace process had reached a turning point and that it was time for Arab states to stand up to Israel.

He also said the Arab League should open a dialogue with Tehran to address concerns, especially among Iran's neighbours across the Gulf, about its nuclear programme.

"We have to study the possibility that the peace process will be a complete failure," Moussa said in his opening speech to the summit.

"It's time to face Israel. We have to have alternative plans because the situation has reached a turning point," he said.

"The peace process has entered a new stage, perhaps the last stage. We have accepted the efforts of mediators.

"We have accepted an open-ended peace process but that resulted in a loss of time and we did not achieve anything and allowed Israel to practice its policy for 20 years."

He did not say what alternatives there were to the peace process, but it could involve a a revival of the Arab Peace Initiative, which was first proposed by Saudi Arabia at the Arab League's summit in Beirut in 2002.

Under that initiative, Arab countries would normalise relations with Israel in return for a complete Israeli withdrawal from occupied territories and a fair settlement for Palestinian refugees.