President Trump said Israelis and Palestinians remain unwilling to pursue any U.S.-led effort to forge a peace deal, issuing rare criticism of the Jewish state.

Mr. Trump characterized a lack of enthusiasm on both sides for brokering peace as “foolish,” accusing both of squandering an opportunity to end the decades-long conflict.

“Right now, I would say the Palestinians are not looking to make peace, they are not looking to make peace. And I am not necessarily sure that Israel is looking to make peace. So we are just going to have to see what happens,” Mr. Trump said Sunday during an interview with the Israel Hayom newspaper.

“I think it is very foolish for the Palestinians and I also think it would be very foolish for the Israelis if they don’t make a deal. It’s our only opportunity and it will never happen after this,” he added during the interview, which also focused on his administration’s decision to recognize Jerusalem as the Israeli capital.

The Trump White House infuriated the Arab world in December with its proclamation on Jerusalem and its intention to move the U.S. Embassy in Israel to the holy city.

“Jerusalem is and always will be the capital of Palestine,” Palestinian President Mahmoud Abbas said during an emergency meeting of the Organization of Islamic Cooperation (OIC) in Istanbul, shortly after the White House announcement.

Characterizing the White House’s policy shift on Jerusalem as “the greatest crime” committed by Washington against Palestinians, Mr. Abbas said the U.S. no longer could play a role in the Middle East peace process.

During his first State of the Union speech last month, Mr. Trump issued a thinly-veiled threat to nations who have voiced opposition to U.S. efforts in Jerusalem.

“In 2016, American taxpayers generously sent those same countries more than $20 billion dollars in aid,” he said. “That is why, tonight, I’m asking the Congress to pass legislation to help ensure American foreign-assistance dollars always serve American interests — and only go to friends of America, not enemies of America.”

Administration officials already have vowed to block future financial aid to the Palestinian Authority unless Palestinians agree to peace talks with Israel.

But Sunday, Mr. Trump walked back claims his administration had taken Jerusalem off the table, reiterating that the city’s borders would be determined through bilateral peace talks between Israel and the Palestinians.

“By taking Jerusalem off the table I wanted to make it clear that Jerusalem is the capital of Israel and as for specific boundaries, I would support what both sides agreed to,” he said Sunday.

Other nations, most recently Russia, have recognized Jerusalem as the Israeli capital, but noted those borders only extend to the western part of the city, Mr. Mneimneh explained. That delineation has always been taken in anticipation of East Jerusalem being the capital of a future Palestinian state.

Mr. Trump also cautioned Israel from pursuing more settlements in disputed areas within the Palestinian territories, saying such efforts would further impede efforts to get peace talks on track.

“The settlements are something that very much complicates and always have complicated making peace,” he said. “I think Israel has to be very careful with the settlements.”

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