German Chancellor Angela Merkel said that the building of Jewish settlements was counterproductive to any lasting peace in the region. As she emerged from talks with Israeli premier Benjamin Netanyahu, she also urged Israel and the Palestinians to calm the situation after weeks of violence.

"I have said this time and again. We have to do everything to calm down the situation and in this spirit I think all sides need to make a contribution," Merkel said.

"I have said this quite often that as regards the two-state solution we consider the settlements to be counterproductive." Merkel's spokesman Steffen Seibert offered a similar message from the meeting via Twitter, focusing on the two-state solution as the "best" way to solve violence in the region.

Merkel also stated that all the while Israel also had an "obligation" to protect its own citizens and added that Palestinians should condemn "everything constituting the support of terror."

Netanyahu's Holocaust blunder

Chancellor Merkel also stressed Germany's inherent responsibility for the Holocaust, after Netanyahu had stirred up controversy by claiming that a Palestinian leader had first given Hitler the idea of exterminating Jews.

"Germany abides by its responsibility for the Holocaust. We don't see any reason to change our view of history," Merkel said.

In a speech on Tuesday, Netanyahu suggested that Adolf Hitler had not planned to exterminate the Jews until he met Palestinian nationalist Haj Amin al-Husseini, the Grand Mufti of Jerusalem, in 1941, who allegedly had instructed Hitler to "burn" the Jews.

"Hitler didn't want to exterminate the Jews at the time. He wanted to expel the Jews," Netanyahu said at the World Zionist Congress.

Netanyahu later backtracked on the claim, denying that he was exonerating Hitler of the responsibility for the Holocaust, but added that Palestinian President Mahmoud Abbas was nevertheless glorifying the Grand Mufti.

"The real question should be directed not at me but at President Abbas: why is he and the Palestinian authority glorifying the official mufti of Jerusalem as a Palestinian icon? They call him the father of the Palestinian nation, this is a war criminal who was sought for war crimes," said the Israeli leader.

Netanyahu maintains government position

Prime Minister Netanyahu meanwhile reiterated his position that Palestinian incitement - not Israeli policies - were at the root of the current violence. He urged the international community to tell Palestinian President Abbas to stop "incitement" of what he condemned as terrorism, which he had earlier vowed to fight at all costs.

"If we want to have peace we have to stop terror. And to stop terror we have to stop incitement," he said following the talks with Chancellor Merkel. "I think it's important that international community demand president Abbas to stop the incitement and stop spreading lies about the Jewish state and about Israel's policy."

Israeli guardianship of the Temple Mount

Claiming that Palestinian President Abbas had joined Islamists in inciting the recent wave of violence against Israelis, Netanyahu said that among the "false" claims made by Abbas was that Israel was "seeking to destroy the Al-Aqsa mosque."

"Israel is the only guarantor in Jerusalem and elsewhere for the sanctity of holy sites," Netanyahu said, taking the Palestinian leader to task for failing to condemn a series of attacks on Israelis in East Jerusalem and the West Bank. Netanyahu had previously declined a UN plan to guard the Temple Mount using international forces.

The Al-Aqsa compound, which is located in Jerusalem's Old City and known as the Temple Mount in Judaism, is considered sacred by all three Abrahamic monotheist religions.

Abbas sends out a warning

Meanwhile Abbas called on Israel to strictly respect rules governing the Al-Aqsa mosque compound.

"The continued occupation and aggression against Christian and Muslim holy sites in east Jerusalem, particularly against Al-Aqsa, opens the door to a religious conflict, which has unfortunately started," Abbas told journalists.

"We don't want it and we are warning over its consequences."

ss/msh (AFP, Reuters)