UPDATE 2-West Bank summit scrapped after Israel bars envoys

* Palestinians hit out at "political siege"

* Israel unapologetic for barring states that don't

recognise it

* U.N. says move undermines peace accords

(Adds U.N. official's statement)

RAMALLAH, West Bank, Aug 5 (Reuters) - A meeting of envoys

from the Non-Aligned Movement due to convene in the

Israeli-occupied West Bank was scrapped on Sunday after Israel

refused to admit four attendees from states with which it has no

diplomatic relations, Palestinian officials said.

The envoys were due to sign a declaration backing the

Palestinians ahead of their planned campaign to win recognition

as a state at the United Nations next month.

Israel barred the foreign ministers of Malaysia and

Indonesia along with ambassadors from Cuba and Bangladesh on the

grounds the four countries do not recognise the Jewish state.

Palestinian officials said the other conference guests,

including the foreign ministers of Egypt and Zimbabwe, were

granted clearance to attend but declined in solidarity with the

barred envoys.

"The goal of this decision, which was issued at the highest

political echelons in Israel, is to thwart the efforts of the

Palestinian leadership to achieve more successes for the benefit

of Palestinians and its efforts to end the occupation,"

Palestinian foreign minister Riyad al-Malki told reporters.

The Non-Aligned Movement is a diplomatic bloc founded during

the Cold War to advocate the causes of the developing world.

Israel was unapologetic about its decision. "We have cleared

entry for representatives of countries which have diplomatic

relations with Israel and we have not cleared those which do

not," said foreign ministry spokesman Yigal Palmor.

Israel controls access to the West Bank, which can be

reached via the main checkpoint outside Jerusalem on the road

coming up from Ben Gurion International Airport, or at the

Allenby Bridge over the Jordan River, on the road from Amman.

The United Nations criticised the Israeli action, saying it

undermined the interim peace agreements which entitled

Palestinians to autonomy in a small part of the West Bank,

called Area A.

"Denying the Palestinian Authority the ability to engage

with members of the international community in Area A is yet

another step that contradicts the credibility of the Oslo

arrangements which affirm the Palestinian right of

self-government," Robert Serry, U.N. Special Coordinator for the

Middle East Peace Process, said in a statement.

"NOTHING CONSTRUCTIVE"

The decision to exclude the envoys came a day after the

Palestinian Authority announced it would resume its bid for

statehood recognition at the United Nations, a campaign strongly

opposed by Israel and the United States.

The planned drive for non-member observer status, akin to the

Vatican's, would be an indirect recognition of their claims on

statehood in the West Bank, East Jerusalem and Gaza Strip. It

would allow them to join a number of U.N. agencies, and the

International Criminal Court.

Once that status was achieved the Palestinians would pursue

full U.N. membership, foreign minister Malki said on Saturday

Israel views Palestinian attempts to bolster their standing

at the United Nations and in other diplomatic bodies as hostile,

saying there is no substitute for direct negotiation in solving

the Middle East conflict.

Hanan Ashrawi of the Palestine Liberation Organization's

executive committee decried Israel's barring of envoys on

Sunday, saying it "exploits its position as an occupying power

to prevent Palestine from communication with the countries of

the world and to isolate the Palestinian people and its

institutions".

She called the Israeli decision "a blatant and crude

exercise of power and a form of political siege".

Twelve envoys belonging to the Non-Aligned Movement's

Palestine Commission were due to convene the meeting in the West

Bank on Sunday, in advance of an annual meeting of the whole

organisation in Iran at the end of the month.

"Nothing constructive, to say the very least, has ever come

out of this committee in the past, and now that it is going to

meet in Iran under the chairmanship of Tehran, expectations

could not be lower," Palmor said. Israel regards Iran as its

number one enemy.

(Additional reporting by Ali Sawafta in Ramallah and Dan

Williams in Jerusalem; Editing by Douglas Hamilton and Pravin

Char)