By Ali Sawafta and John Irish
UNITED NATIONS (Reuters) - President Mahmoud Abbas told the United Nations' top official on Monday he would seek full U.N. membership for a Palestinian state, a move the United States and Israel warn could deal a devastating blow to hopes for resuming peace negotiations.
Abbas told U.N. Secretary-General Ban Ki-moon he would press ahead with plans to ask on Friday for a Security Council vote on Palestinian membership. Washington has threatened to veto any such move.
Ban told Abbas he would forward on to the Security Council any application submitted, and called for the Israelis and the Palestinians to resume talks "within a legitimate and balanced framework," U.N. spokesman Martin Nesirky said.
The Palestinian crisis has overshadowed this week's meeting of the U.N. General Assembly and sparked hectic talks aimed at averting a confrontation which carries risks for the Palestinians, Israel and the United States.
Senior diplomats from the United States, Russia, the European Union and the United Nations -- the so-called Quartet of Middle East mediators -- are meeting throughout the week in hopes of finding a way forward.
The Quartet has for months been trying to put together guidelines for future peace talks, thus far without result.
Israeli Prime Minister Benjamin Netanyahu has offered to launch direct negotiations, but has not made any concession on key issues that the Palestinians say prevent the talks from resuming.
Abbas, speaking to reporters on his plane to New York, acknowledged it could have repercussions for his Palestinian Authority, the fragile government-in-waiting which depends on international financial aid for its survival in the Israeli-occupied West Bank.
"We decided to take this step and all hell has broken out against us," he said, adding that he would not be swayed.
"From now until I give the speech, we have only one choice: going to the Security Council. Afterwards, we will sit and decide," he said.
The White House underscored its threat to veto any Palestinian move at the Security Council, and said it would focus on trying to nudge the two sides back to negotiations.
"We've made our position clear, which is that we oppose actions to achieve a Palestinian state through the United Nations," Obama's deputy national security advisor Ben Rhodes told reporters.
Rhodes said Obama had no meeting planned with Abbas while they are both in New York, but said there was always the possibility of a change in the schedule.
TALKING ABOUT TALKS
U.S.-backed talks between Abbas and Netanyahu collapsed nearly a year ago when the Palestinians pulled out after Israel declined to extend a partial moratorium on Jewish settlement building in the West Bank.
The two sides remain divided on borders, the status of Jerusalem, the future of Palestinian refugees and whether Israel should be acknowledged as a Jewish state.
The Palestinians say they will not resume talks unless the moratorium is reinstated. Israel says talks should resume without preconditions with the aim of producing two states.
The Palestinian decision to go to the United Nations has caused consternation in Washington, where some U.S. lawmakers say they will try to cut the roughly $500 million in U.S. aid per year to the Palestinians if they refuse to back down.
The Palestinian Authority's central bank chief warned this could doom current efforts at self-government. "Really, the risk of PA collapse is very real under the financial strain," Jihad al-Wazir told Reuters.
Saudi Arabia on Monday said it would pay the Palestinian Authority $200 million, which could help in the short term but would not fully replace lost U.S. funding.
A SECOND ROUTE
With little hope of success in the Security Council, the Palestinians may ask the U.N. General Assembly to upgrade their standing from an "entity" to "a non-member state" -- a move they believe is likely to pass with support from at least 126 members of the 193-member body.
Abbas is scheduled to meet French President Nicholas Sakrozy on Tuesday, and met on Monday with French Foreign Minister Alain Juppe, who warned that both Israel and the Palestinians were courting disaster.
"The only solution is to resume talks," Juppe said in remarks at the Council on Foreign Relations in New York in comments also echoed by Britain.
A U.S. Security Council veto would carry diplomatic risks for Washington, which could find itself isolated alongside its longtime ally Israel during a period of unprecedented political turmoil across the Middle East.
It would also likely boost tensions between the Palestinians and Netanyahu's government, which has already seen traditionally steady ties with key neighbors Egypt and Turkey deteriorate quickly, adding to regional uncertainty.
Secretary of State Hillary Clinton on Monday urged Turkey's foreign minister not to do anything to worsen Ankara's ties to Jerusalem, which lurched into crisis after a deadly 2010 Israeli raid on a Turkish aid flotilla.
Clinton, asked if there was any progress on the broader Palestinian impasse, said work continued.
"It's early in the week. A lot of people are not even here yet and there's been an enormous number of meetings ... But I think that everyone knows our position, and obviously our goal is a two-state solution and that's what we're going to keep working toward," she said.
(Additional reporting by Daniel Bases, Tom Perry, Matt Spetalnick, Arshad Mohammed; writing byAndrew Quinn; editing by Mohammad Zargham)