Arab leaders Sunday ruled out renewed Middle East peace talks unless Israel halts all settlement building and urged US President Barack Obama to keep up his opposition. At the end of a two-day summit in Libya, they called for Obama to remain loyal to his “initial and key position” to work to halt Jewish settlement on Palestinian land that posed a “dangerous obstacle” to peace. The summit was dominated by Israel's decision this month to build 1,600 settler homes in mainly Arab East Jerusalem, which the Palestinians see as the capital of their future state. Arab leaders also agreed on “a plan of action that includes political and legal measures to confront Israel's attempts to Judaize Jerusalem,” and pledged to raise $500 million in aid to bolster the Palestinian presence there. “The resumption of Palestinian-Israeli negotiations demands that Israel implements its legal commitments by stopping all settlements in the occupied Palestinian territories, including Occupied East Jerusalem,” the final resolution read. The statement insisted “on the need to have a timeframe for these negotiations and that they resume from where they left off and on the basis of what has been agreed upon in the peace process.” Palestinian President Mahmoud Abbas already on Saturday ruled out new talks with the Jewish state until it halts settlements, despite agreeing earlier this month to US calls to enter into indirect negotiations with Israel. “We cannot resume indirect negotiations as long as Israel maintains its settlement policy and the status quo,” the Fatah leader told the summit. Arab League chief Amr Moussa, who said ahead of the summit that talks with Israel had become “pointless,” urged Arab leaders to mull their options in case of a total collapse of the peace process. UN chief Ban Ki-moon, in an address to the summit's opening day, sought Arab support for US-brokered indirect talks while stressing Jerusalem must emerge as the “capital of two states.” The final communiqué of the summit tasked the Arab group in New York with seeking a special United Nations General Assembly session to condemn Israeli actions in Occupied Jerusalem and form an Arab League legal committee to document Judaization measures and the seizure of Arab property. Legal action against Israel It called for national and international legal action against Israel, and urged the Arab media to dedicate a week to detailing the Arab plan to save Jerusalem. The communiqué condemned terrorism in all its forms, called for differentiating between terrorism and legitimate resistance to occupation, and rejected associations between terrorism and Islam. It called for work to address the root causes of terrorism and appealed to countries, particularly Great Britain and the European Union, to tackle persons supporting terrorism, deport them, and not grant them political refugee status or permit them to abuse the climate of freedom to damage the security and stability of Arab nations. Arab Union The leaders also decided to meet again before the end of October at an “extraordinary summit” to discuss a proposal to reform and transform the Arab League into an “Arab Union” and another to set up an “Arab Neighborhood Zone” open to non-Arab powerbrokers such as Turkey and Iran. “We invite Turkey to join us but we will hold discussions with Iran before inviting it,” Moussa said on Sunday, citing some “points of difference” with the Islamic republic. The Arab leaders also welcomed the results of Iraq's March 7 general election, and called for the rapid formation of a new government, saying “Iraqi national interest should be above everything else.” On Sudan, the communiqué expressed solidarity with the Arab country, and condemned any violations of its sovereignty while supporting the Sudanese government in its efforts to improve humanitarian conditions in Darfur. Nuke-free Mideast Arab leaders also called for a Mideast free of nuclear weapons during a closed-door session at the summit, diplomats at the meeting said. Many Arab countries view Israel's alleged nuclear program and Iran's nuclear programs with alarm, and have repeatedly called for an agreement to ban nuclear weapons from the region. In their closing statements, leaders stressed that the development of nuclear weapons threatened peace and security. They called for a review of the 1970 Nuclear Non-Proliferation Treaty (NPT) in order to create a definitive plan for eliminating nuclear weapons development. They urged the UN to hold a conference to establish the Middle East as a nuclear-weapons-free region. However, it is unclear how much weight their calls will carry with Iran or Israel, neither of which is a member in the Arab League. Some delegations initially called for allowing a few Arab countries to possess nuclear weapons if Israel does not join the NPT within a certain period of time, but that proposal was left out of closing remarks. Arab leaders also called on the International Atomic Energy Agency, the UN's nuclear watchdog, to terminate its technical assistance programs in Israel if the country does not join the NPT and allow inspections to begin. Iraq is due to host the 2011 Arab summit. Libyan leader Muammar Gaddafi, who hosted his first ever summit in his coastal hometown of Sirte, was true to his reputation of unpredictibility by failing to keep with custom and deliver a closing speech at the end of the summit.