Following US Secretary of State Hillary Clinton's visit here this weekend, Palestinians are reacting with frustration over what appeared to be a shift in the Obama administration's policy toward Israeli settlement growth in the West Bank.

Although Secretary Clinton had previously insisted that the US wanted a total freeze on West Bank settlement expansion, she said during her meetings here this weekend that Palestinians should return to negotiations without preconditions – and lauded Israeli Prime Minister Benjamin Netanyahu's steps toward limiting settlement growth as "unprecedented."

Palestinian Prime Minister Salam Fayyad, in an interview with the Monitor, said that this most recent development illustrated an "asymmetry" in negotiations dating back to the 1993 Oslo Accords – and one that must be rectified in order for future talks to be more fruitful.

"What are we going to do when it comes time to actually resolving these issues, and we're told, 'Sorry. That's all that can be on offer because that's all that Israel is prepared to offer,'" said Dr. Fayyad, adding that Palestinians are being asked to settle for less than what was considered as conducive to peacemaking under the Bush administration. "The key idea underlying the Oslo process leaves the matter of ending the occupation up to the occupying power – that is, Israel. Where we are today shows the shortcomings of this approach."

Netanyahu takes credit for 'economic boom'

But Israeli Prime Minister Benjamin Netanyahu argues that Israel is doing more than ever to help Palestinians in the West Bank: easing travel restrictions and removing checkpoints, fostering Palestinian economic growth, and offering to curtail some settlement construction.

"We are making a focused effort to resume the peace process," Netanyahu said at a cabinet meeting on Sunday, during which he said his policies had led to an "economic boom" for Palestinians. "We are ready to start negotiations without delay."

Never before, Netanyahu says, have there been Palestinian "preconditions" to negotiations. As such, he has portrayed the Palestinians – particularly President Mahmoud Abbas, who refuses to have official talks in the absence of a settlement freeze – as the main stumbling block to progress.

Fayyad pointed out, however, that that is not a new demand – nor a purely Palestinian one; the 2003 road map introduced by the Bush administration insisted on a full freeze in settlement activity, including natural growth. Under former prime minister Ariel Sharon, Israel agreed to implementing that road map, as did the Palestinians, whose obligations under the blueprint included cracking down on extremism. Both accused each other of not living up to their promises.

"It's as if we Palestinians are the only ones that have obligations that need to be observed, even though the road map included a total Israeli settlement freeze," said Fayyad.

Arabs express 'deep disappointment' after Clinton remarks

In addition to presenting an impasse on Israeli-Palestinian talks, US backpedaling on the settlement issue could also stymie the Obama administration's efforts to reach out to Arab leaders and win their support for normalizing ties with Israel.

"I am telling you that all of us, including Saudi Arabia, including Egypt, are deeply disappointed ... with the results, with the fact that Israel can get away with anything without any firm stand... ," Arab League Secretary-General Amr Moussa told reporters at a gathering of Arab foreign ministers in Marrakesh, Morocco.

Clinton was in Morocco on Monday in a stop in part aimed at shoring up support for the Obama administration's work on the Israeli-Palestinian conflict.

She was scheduled to address the foreign ministers at the Forum of the Future in Marrakesh on Tuesday, and was also expected to meet with Moroccan Foreign Minister Taieb Fassi Fihri, the country's King Mohammed V, foreign ministers of several Persian Gulf states, and Saudi Foreign Minister Prince Saud al-Faisal. Saudi Arabia authored the 2002 Arab Peace Initiative, which suggests that if Israel gets to a peace deal with the Palestinians, it will throw open the doors to peace with the rest of the Arab world.

The Obama administration has tried to convince some of the Arab states to make moves toward normalizing relations with Israel as an incentive in the interim, but has met with little success.

Asked in Morocco about the negative Arab reaction to her comments on the settlement freeze issue, Clinton said her words were meant as "positive reinforcement" – something she believes in giving either side when they take steps toward peace. But she insisted that the US position remained firm.

"The Obama administration's position on settlements is clear and unequivocal. It has not changed," she said. "The US does not accept the legitimacy of continuing Israeli settlements."

• Material from AP and Reuters was used in this report.