The Obama administration gave in to Israel on freezing all building activity back in September. Apparently Clinton has a bad memory. Earlier in the year the Obama administration had been adamant that all activity cease in order to move peace negotiations along but in September suddenly a much less stringent view was taken allowing on going construction projects to continue among other things. Given that the US has not managed to freeze settlement activity in spite of its demands it is not surprising that Abbas should make it a condition of negotiations. Here is a snippet from an article this July:
""Obama administration officials in Israel to demand end to settlement building
Chris McGreal in Washington and Ian Black guardian.co.uk, Monday 27 July 2009 17.32 BST
Barack Obama has dispatched a clutch of senior American officials to Jerusalem to press his demand for an end to Jewish settlement construction and move along a diplomatic process aimed at imposing a blueprint for peace if negotiations fail. ""
Abbas is already unpopular because of his earlier support for deferring consideration of the Goldstone report and Israel threatened not to go forward with the peace process if the report did go before the UN. Now it has. Neither Israel nor Abbas seem in any mood for peace negotiations.
This is from the Jerusalem Post.
....US Secretary of State Hillary Rodham Clinton on Saturday night rejected Palestinian Authority President Mahmoud Abbas's demand that Israel freeze all settlement activity as a precondition to negotiations.
Stopping construction in the settlements "has never been a precondition, it has always been an in issue within the negotiations," Clinton said at a joint press conference with Prime Minister Binyamin Netanyahu in Jerusalem.
In a strong show of support for Israel, she said she approved of Netanyahu's decision to issue a moratorium on new construction permits.
"What the prime minister has offered... a restraint on the policy of settlements, which he has just described, no new starts, for example, is unprecedented in the context of prior to negotiations," Clinton said, in advance of her meeting with the prime minister.
Assistant Secretary of State for Public Affairs Philip J. Crowley later clarified for The Jerusalem Post that the United States is still demanding that Israel freeze all settlement activity, but that it should not be a precondition for talks between Israelis and Palestinians.
...Earlier in the day, Clinton met with Abbas in Abu Dhabi. He rejected Clinton's request to resume peace talks with Israel, saying this would not happen unless the Netanyahu government froze all construction in the settlements, chief PA negotiator Saeb Erekat said.
Israel has insisted that work must continue on the 3,000 homes now under construction in the settlements and says there are no limits on building in Jerusalem.
...Netanyahu said that Israel was willing to talk with the Palestinians without any conditions.
"We are prepared to start peace talks immediately," he said. "What we should do on the path to peace is to get on it and to get with it."
He said that in the past 16 years the Palestinians had never demanded that Israel freeze settlement activity as a precondition to talks and that their stance now was a change in policy.
It's a stance that Erekat said the Palestinians were insisting upon.
"The Palestinian Authority won't make any concessions on the issue of settlements," he said.
...He added that the gap between the Palestinians and Israel remained very wide - a factor that is hindering the resumption of the peace talks. ...
Hilary Leila Kreiger, Jerusalem Post staff and AP contributed to this report.