JERUSALEM (AFP) - French President Nicolas Sarkozy called on Monday for a halt to Jewish settlement activity in the occupied West Bank, telling the Israeli parliament this was the key to peace.

“There can be no peace without stopping settlement,” he told members of the Knesset.

“There is a proposal backed by many members of your Knesset for the adoption of a law that would encourage settlers to leave the West Bank in exchange for compensation and relocation in Israel,” he said.

Israeli authorities have announced plans to construct hundreds of new homes for Jewish settlers in the West Bank in recent months, infuriating the Palestinians and drawing international criticism.

Sarkozy also called for Israel to ease restrictions on the freedom of movement of Palestinians within the West Bank, where the army operates hundreds of roadblocks which the World Bank says are a major obstacle to economic growth but which Israel insists are vital to its security.

The French president stressed that Palestinians too had to do more in order to achieve peace.

“There can be no peace if Palestinians themselves do not combat terrorism,” he said.

Sarkozy also underlined that a lasting peace required the creation of a viable Palestinian state alongside Israel with both sharing Jerusalem as their capital.

“There can be no peace without recognising Jerusalem as the capital of two states and the guarantee of freedom of access to the holy places for all religions,” he said

Courtesy of:http://ca.news.yahoo.com/s/afp/080623/world/mideast_france_diplomacy_palestinian