Israeli Prime Minister Benjamin Netanyahu said Wednesday that the U.S. peace plan foresees the proposed Palestinian capital being located in Abu Dis, a neighborhood on the outskirts of Jerusalem, which the U.S. recognizes as Israel’s undivided capital. Most of the international community holds that Israel and the Palestinians should resolve their conflict by way of a two-state solution but the there is disagreement regarding contours of Jerusalem. 

Abbas’s comments regarding 'Abu Sid' proposal came during a speech he delivered to a meeting of the Palestinian Central Council, the Palestine Liberation Organization’s second-highest decision-making body.  “What would you want if Jerusalem were to be lost? Would you want to make a state with Abu Dis as its capital?” Abbas stated rhetorically. “That’s what they are offering us now. Abu Dis.” Later in his speech, which lasted some two hours, Abbas said that the Palestinians would be prepared to work with an international framework for the peace process.

According to Makan 33, an Israeli television channel, Netanyahu answered reporters’ questions about the so-called peace plan after a joint press conference with U.S. President Donald Trump in the capital, Washington, D.C.

"The capital of the Palestinian State will be Abu Dis, in East Jerusalem,” he said.

"Israel will dominate all Jewish settlements in the West Bank.”

Netanyahu said the U.S. has set certain conditions on Palestinians for the start of negotiations, including recognising the Jewish state, recognizing Israel's sovereignty over Jerusalem and giving up the absolute right to return.

He said the U.S. has demanded that Palestine disarm Gaza, drop payments to Palestinian detainees and martyrs’ families, calling them terrorists, stop filing complaints at the International Criminal Court and not become a member of an international organization without Israel's approval. 

Netanyahu stressed that without fulfilling these conditions, there will be no change in Area C of the West Bank.

“At the same time, Israel will apply its laws to the Jordan Valley, to all Jewish communities in Judea and Samaria and to other areas that the plan designates as part of Israel and which the United States has agreed to recognize as part of Israel,” he said.

Netanyahu noted that they promised not to build a new settlement or expand construction activity in Area C for four years.

Under the 1995 Oslo Accords between Israel and the Palestinian Authority, the West Bank, including East Jerusalem, was divided into three portions – Area A, B and C. Abbas also said that Israel “has ended” the Oslo Accords and called for a decision to be made about its future. 

The PA president has stated many times in the past that the Palestinians will not remain committed to the Oslo Accords if Israel does not maintain its obligations to them. Nonetheless, Abbas has not withdrawn from the agreements, which established the PA and its various institutions. 

Abbas also reiterated his support for the two-state solution. “I’m with the two states…according to international legitimacy and the Arab Peace Initiative, the State of Palestine along 1967 borders,” he said. 

Israel prevents Palestinians from conducting construction projects in parts of the West Bank designated as Area C under the agreement, which falls under administrative and security control of Israel.

Area C is currently home to 300,000 Palestinians, the vast majority of whom are Bedouins and herding communities who predominantly live in tents, caravans and caves. Speaking about the future US peace plan, Abbas said he has already said “no” to US President Donald Trump regarding Abu Dis becoming capital of future Palestinian State.

International law views the West Bank and East Jerusalem as "occupied territories" and considers all Jewish settlement-building activity there illegal.