Abbas says was 'very close' to peace agreement with Israel

Palestinian president Mahmud Abbas said on Monday he was "very close" to reaching a peace agreement with Israel before a new right-wing government assumed power at the end of March.

"We were very close to reaching an agreement with the Israeli side, and then the new government came and said we had to start from zero," he said, referring to hawkish Prime Minister Benjamin Netanyahu's government.

"We sat and negotiated with the Israelis over drawing borders and we negotiated these borders with (former Israeli Prime Minister Ehud) Olmert and (former Foreign Minister Tzipi) Livni," Abbas said during a meeting with Palestinian businessmen in his West Bank headquarters.

"We had started to exchange maps... If we had finished with this then we could have finished with the issue of Jerusalem and the settlements and water," he added, listing some of the core issues of the decades-old conflict.

"As far as refugees, we discussed the principle of return but we differed on the numbers," he said, referring to the fate of the 4.7 million UN-registered Palestinian refugees scattered across the Middle East.

Olmert said shortly before leaving office that he was close to reaching a peace deal with the Palestinians before the last round of direct talks was suspended at the turn of the year during the Gaza war.

He blamed the failure to reach an agreement on the "weakness and lack of courage" on the part of Palestinian leaders.

But until now the Palestinians had always insisted that Olmert's proposals were too vague and that nothing had been agreed on.

US President Barack Obama's administration has been struggling for months to relaunch peace talks but the Palestinians have said they will not return to the table without a complete freeze of Israeli settlement construction.

Washington initially demanded that Israel halt all settlement growth but in recent weeks appeared to backtrack, urging both sides to relaunch peace talks with or without a full settlement freeze.

On Thursday the beleaguered Palestinian president said he will not seek another term in elections he hopes to stage in January, a move widely seen as a bid to put pressure on Washington to halt the settlements.