Israel's "red line" is that the country will not negotiate with anyone over Jerusalem, Foreign Minister Avigdor Liberman told Army Radio on Sunday, after the EU condemned as "settlement building" a plan to build 797 homes in Gilo.

"Jerusalem is not a settlement," Liberman said in his second attack on the EU since its public censure of the plan. "Gilo is a Jewish neighborhood. Today there are 32-33,000 Jews living there. It's an integral part of Jerusalem."

An Interior Ministry regional planning committee gave initial approval to the project in June and completed the planning process on Thursday, according to Hagit Ofran of Peace Now.

But before construction can begin, the Ministry of Construction and Housing and/or the Israel Lands Authority must call for tenders and the Jerusalem Municipality must issue building permits.

EU foreign policy chief Catherine Ashton condemned the plan and called it "regrettable" and "illegal."

"Settlements are illegal under international law and threaten to make a two-state solution impossible," her office said. "The EU has repeatedly urged the government of Israel to immediately end all settlement activities in the West Bank, including in east Jerusalem, in line with its obligations under the road map.”

Liberman encouraged European officials to focus on their internal issues, including ongoing strife in Brussels and Cyprus. He also invited them to visit Gilo to gain a better understanding of the neighborhood's relation to Israel's capital. "Gilo is a seven minute walk from the city center," he said. "Its population is homogeneously Jewish."

He added: "Every Israeli government has built there, starting with [former prime minister Levi] Eshkol and [former prime minister] Golda Meir."

"The stance the EU has taken is unilateral, and one which does not promote dialogue with the Palestinians," he said. "It is an anti-Israel position."

Pressed on why Liberman endorses EU intervention on the Iranian threat while denying its stance on settlements, the foreign minister stated that the European sanctions against Iran are in its self interest. "The EU is not working for us. They're working for them," he said. "The sanctions they're imposing on Iran are not for Israel's sake. The Iranian regime is supporting genocide in Syria, they're terrorizing Lebanon. They tried to assassinate the Saudi ambassador in US."

Turning to the domestic political arena, Liberman decried Labor party leader Shelly Yacimovich, saying she was promoting an agenda that is "Cuban and North Korea."

"Shelly Yacimovich uses all of the slogans of the communists," he said. "We'll take money from the rich and give it to the poor. This is pure populism. She has no idea what a social democratic state even is."

Liberman mentioned that he is close friends with former prime minister Ehud Olmert, who is currently contemplating a return to politics.

Tovah Lazaroff contributed to this report

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