The Jordanian-born Twal made the statement during a procession to Bethlehem, the birthplace of Jesus, where he is due to lead midnight mass at the Church of the Nativity.
The church in Manger Square and Bethlehem itself are today both considered part of the Palestinian Authority.
One must pass through a checkpoint manned by armed PA security personnel in order to enter the city.
The procession wound its way out of the Old City of Jerusalem and through the separation barrier built by Israel to prevent terrorists from infiltrating the pre-1967 part of the country and carrying out suicide bombing attacks.
In Bethlehem, the Roman Catholic leader was met at Manger Square by a throng of pilgrims from around the world, tourists and clergy.
The outpouring, although expected, is seen only on rare occasions these days as the “little town of Bethlehem” becomes more empty of the faithful each year.
Its Muslim residents have increasingly harassed their Christian neighbors, prompting many to decide to leave the area and move to a more “peaceful” environment.
Twal's statement was made in reference to the de facto recognition by the United Nations of the Palestinian Authority as an independent sovereign state.
In November, the U.N. General Assembly voted to pass a resolution granting the PA upgraded status as a nonmember observer state, similar to that of the Vatican.
The move in essence circumvents the mandate to negotiate its final status with Israel, as delineated in the internationally-recognized Oslo Accords signed by both parties