Palestinian Pres. defiant as "all hell" breaks out over U.N. plan

(Reuters) - President Mahmoud Abbas said he is sticking to his plan to seek full United Nations membership for a Palestinian state although "all hell has broken out" over the move opposed by the United States and Israel.

Abbas, speaking en route to the U.N. General Assembly in New York, said he had been told by the United States and European governments that "matters will be bad" after a move which reflects his frustration with a moribund peace process.

"To what extent, we will know later on," said Abbas, head of the Palestinian Authority which depends on international financial aid for its survival in the Israeli-occupied West Bank.

The United States and Israel wanted to keep the peace process restricted to "a bilateral dialogue" overseen from afar by Washington, he said. But all the while this dialogue had failed, prompting the U.N. membership move.

"We decided to take this step and all hell has broken out against us," he told reporters on his flight to New York.

Abbas has said he will present the request for full U.N. membership during his speech to the General Assembly on Friday.

However, the United States has said it will block the Palestinian bid for full U.N. membership on the grounds that only a resumption of a two-decade old negotiation process can advance the cause of peace.

Some members of the Israeli government are calling for tough retaliation against a Palestinian move they say aims to isolate Israel. Some U.S. politicians have said they will try to cut American aid to the Palestinians, totalling some $500 million a year, if they refuse to back down.

The PA already faces a financial crisis this year because of a shortfall in aid from Arab states.

Holding Israel responsible for the failure of the peace process to date, the Palestinians say the U.N. move will help to level the playing field with their more powerful adversary before any future negotiations.

However, it is destined to fail because of opposition from the United States, which has veto power in the Security Council.

Israeli Prime Minister Benjamin Netanyahu said on Sunday he expected that outcome. "Their attempt to be accepted as a regular member of the U.N., this attempt will fail," he said during a weekly cabinet meeting.

"I believe that in the end, after the smoke clears, after everything that happens in the U.N., ultimately the Palestinians will come to their senses -- that's my hope -- and will abandon these negotiations-circumventing maneuvers and will sit down at the table," he said.

The last round of direct talks between Abbas and Netanyahu collapsed nearly a year ago because of a row over Israel's expansion of Jewish settlements on the land where the Palestinians aim to found an independent state.

FULL MEMBERSHIP BID ONLY DECISION SO FAR

The Palestinians argue that the expansion of the settlements in the West Bank and East Jerusalem is undermining the chances of establishing a viable state of Palestine on those lands, together with the Gaza Strip.

Abbas said Western mediators, who have been trying to dissuade the Palestinians from pursuing the U.N. path, had brought nothing new during talks last week. He repeated his view that negotiations remain his "fundamental choice". "But on what foundations?" he said.

Anticipating the failure of the membership application, the Palestinians have said they could go to the U.N. General Assembly to request an upgrade in their standing from their current status as an "entity" to "a non-member state".

Not requiring Security Council approval, the Palestinians expect such a step to succeed due to the support they say they have from at least 126 members of the 193-member General Assembly.

But Abbas said the Palestinians' only decision so far was to request full membership through the Security Council. "From now until I give the speech, we have only one choice: going to the Security Council. Afterwards, we will sit and decide," he said.

(Writing by Tom Perry; Editing by David Stamp)