(Updates with Abbas talks, previously JERUSALEM) By Mohammed Assadi RAMALLAH, West Bank, April 1 (Reuters) - Palestinian President Mahmoud Abbas told German Chancellor Angela Merkel on Sunday the time had come to end a year-old economic embargo of the Palestinian government. "There is no justification to maintain it (the embargo) at all ... Otherwise it will be understood that this is a deliberate siege against the Palestinian people," Abbas said after meeting Merkel in the West Bank city of Ramallah. Merkel, holder of the European Union's rotating presidency, is trying to build on momentum for renewed peace talks between Abbas and Israeli Prime Minister Ehud Olmert after Arab states revived their peace offer to the Jewish state. During her visit, Merkel did not meet any ministers from the Palestinian unity government. The government, led by Hamas Islamists, includes members of Abbas's Fatah faction and independents. Arab leaders have revived a five-year-old peace plan that offers Israel normal ties with Arab countries in return for full withdrawal from land seized in a 1967 Middle East war, creation of a Palestinian state and a "just solution" for Palestinians displaced in 1948 with Israel's creation. Merkel welcomed the results of the summit and said Europe should build on it and revive diplomatic efforts by the Quartet of Middle East power brokers, which is comprised of the European Union, the United States, the United Nations and Russia. "We all have the feeling that things are moving. We have a window of opportunity," Merkel said earlier at the Hebrew University of Jerusalem where she was given an honorary doctorate. "There is a major chance here which we must grasp." CAPTIVE SOLDIER Merkel called on Abbas to help secure the release of Israeli soldier Gilad Shalit, captured by Gaza militants in a raid into Israel in June. "I am not going to talk about optimism in order that no one would consider that as a promise," Abbas said. "He will inevitably be released." Merkel met Olmert and Foreign Minister Tzipi Livni before touring the Yad Vashem Holocaust museum. She planned to meet Olmert again on Sunday night. "Israel is at a critical crossroads of important decisions," Olmert said in Jerusalem. "We are in a process of confronting significant threats on the one hand and opportunities to advance the diplomatic process with Arab countries on the other." During a visit to Jordan on Saturday, Merkel urged the Palestinian unity government to embrace the demands of the Quartet of Middle East mediators to recognise Israel, renounce violence and abide by existing peace accords. The unity government's programme contains a promise to "respect" previous Israeli-Palestinian pacts. It does not call for recognising Israel and says resistance against the Jewish state in "all its forms" is a legitimate Palestinian right. During her Middle East tour, Merkel will also visit Lebanon, meeting Prime Minister Fouad Siniora and dropping in on a German frigate which is part of the U.N. peacekeeping mission there. (Additional reporting by Allyn Fisher-Ilan in Jerusalem and Nidal al-Mughrabi in Gaza)
