DAVOS: President Donald Trump insisted Thursday that Palestinians had "disrespected" the United States and threatened to withhold aid worth hundreds of millions of dollars until they agree to US-brokered peace talks.
"They disrespected us a week ago by not allowing our great vice president to see them," Trump said during a meeting with Israeli Prime Minister Benjamin Netanyahu in Davos, Switzerland.
"We give them hundreds of millions," Trump added. "That money is not going to them unless they sit down and negotiate peace."
Palestinians were infuriated by Trump's recent decision to recognise Jerusalem as Israel's capital -- which for decades both sides agreed would be the subject of negotiation.
Facing severe pressure at home, Palestinian leader Mahmoud Abbas responded by cancelling a planned meeting with US Vice President Mike Pence.
Palestinians, who also consider the divided city their capital, took to the streets in deadly riots after Trump's decision.
During the meeting with Netanyahu in Davos, Trump tried to convince a deeply sceptical Arab world that he could still be an honest broker.
"We have a proposal for peace. It is a great proposal for the Palestinians," Trump claimed, adding that Israel would also be forced to make concessions.
But Trump also doubled down, saying he would move the US embassy to Jerusalem as soon as next year, despite no suitably sized building existing.
"We anticipate having a small version of it open sometime next year," Trump said.
Netanyahu warmly welcomed Trump's "historic decision", saying it "recognises history, recognizes a certain reality, built on the basis of truth."