President Donald Trump on Thursday threatened to cut off aid to the Palestinians and then said he has a "great proposal" for Mideast peace.
"The money's not going to them unless they sit down and negotiate peace," Trump said while meeting with Israeli Prime Minister Benjamin Netanyahu at the World Economic Forum in Davos, Switzerland.
"We have a proposal for peace. It's a great proposal for the Palestinians. I think it's a very good proposal for Israel," Trump added.
During the decades of peacemaking, the United States has generally tried to get the parties to come up with their own solution rather than putting forward any specific plan.
Trump's comments follow heightened tensions between his administration and Palestinian leaders over his decision to recognize Jerusalem as Israel's capital. Palestinian Authority President Mahmoud Abbas refused to meet with Vice President Mike Pence during his recent trip to the Middle East in protest of the move.
The United Nations also voted overwhelmingly to condemn Trump's decision.
Trump said Thursday that Abbas "disrespected" the United States by not meeting with Pence. "We're not going any further" on peace talks unless the Palestinians show "respect" to the U.S., the president added.
The Trump administration requested $260 million for economic development and law enforcement programs in the West Bank and Gaza in its fiscal 2018 budget, according to The Associated Press.
Netanyahu praised Trump's decision to recognize Jerusalem.
He added that Israel will support Trump "all the way" if he decides to pull out of the Iran nuclear deal.