UNITED NATIONS: U.S. Ambassador Susan Rice objected Wednesday to the Palestinians' latest bid to capitalize on their upgraded U.N. status when their foreign minister spoke at Security Council while seated behind a nameplate that read "State of Palestine."

It was the first Palestinian address to the Security Council since the U.N. General Assembly voted overwhelmingly on Nov. 29 to upgrade the Palestinians from U.N. observer to non-voting member state.

Rice said that the United States does not recognize the General Assembly vote in November "as bestowing Palestinian 'statehood' or recognition."

"Only direct negotiations to settle final status issues will lead to this outcome," Rice said.

"Therefore, in our view, any reference to the 'State of Palestine' in the United Nations, including the use of the term 'State of Palestine' on the placard in the Security Council or the use of the term 'State of Palestine' in the invitation to this meeting or other arrangements for participation in this meeting, do not reflect acquiescence that 'Palestine' is a state," she added.

The U.N. General Assembly vote to upgrade the Palestinians' status was important because it gave sweeping international backing to their demands for sovereignty over lands Israel occupied in 1967, including east Jerusalem. But it did not actually grant independence to the 4.3 million Palestinians who live in the West Bank, east Jerusalem and the Gaza Strip.

In his speech to the Security Council, Palestinian Foreign Minister Riad Malki reiterated the Palestinian position that a two-state solution be based on the pre-1967 borders.

Palestinian President Mahmoud Abbas took another symbolic step to capitalize on the U.N. status two weeks ago, proclaiming that letterhead and signs would bear the name "State of Palestine."

Robert Serry, the U.N. special coordinator for the Middle East Peace Process, told reporters that the nameplate read "state of Palestine" because the U.N. Secretariat "is guided by the membership, which has pronounced itself on this issue" in the November General Assembly vote.

"At the same time, member-states have their rights to reserve their opinion" on U.N. decisions, he said. "That resolution does not diminish the need for negotiations to actually arrive at a two-state solution."

Israeli U.N. Ambassador Ron Prosor told the council that "the major obstacle to the two-state solution is the Palestinian leadership's refusal to speak to their own people about the true parameters of a two-state solution."