The peace process threatened to spiral out of control Tuesday over Israeli plans to advance 1,345 housing units in Jewish neighborhoods of east Jerusalem.

Prime Minister Binyamin Netanyahu had flown to the US Saturday night hoping to break the impasse in the stalled peace talks. Instead, US President Barack Obama publicly reprimanded him as the Palestinians reissued their threats to seek unilateral statehood.

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“The international community must respond to Israel’s unilateral measures by instantly recognizing a Palestinian state along the 1967 borders,” said chief PLO negotiator Saeb Erekat.

Speaking about the Jerusalem homes at a press conference in Indonesia, Obama said, “This kind of activity is never helpful when it comes to peace negotiations.” He added that such “incremental steps can end up breaking down trust between the parties.”

Netanyahu, in turn, sharply defended Israel’s right to build in Jerusalem, which it claims as its eternal united capital, even as the Palestinians claim the eastern party of the city as the capital of their future state.

“Jerusalem is not a settlement. Jerusalem is the capital of Israel,” the Prime Minister’s Office said in a statement on Tuesday, adding that the government had never agreed to place any restrictions on construction in Jerusalem, which has 800,000 residents.



Although much of the international community equates construction in east Jerusalem with that of West Bank settlements, Israel makes a sharp distinction between the two. From November of last year to September, it halted new settlement construction in the West Bank, but during that time it continued to issue new tenders for building in east Jerusalem.

“Israel does not see any connection between the peace process and the policy of planning and construction in Jerusalem, which has not changed in 40 years,” the statement continued. “For the last 40 years every Israeli government built in every part of the city. During that period, peace agreements were signed with Egypt and Jordan, and for 17 years direct negotiations were held with the Palestinians. These are historical facts. Construction in Jerusalem has never interfered with the peace process.”

The statement went on to say that for the past 40 years, Israel and the US had disagreed over the status of east Jerusalem, but that Israel hoped to overcome these differences and stay focused on the peace process. It added that Netanyahu was hopeful that his meeting Thursday with US Secretary of State Hillary Clinton would advance the peace process.

The prime minister was not scheduled to meet with Obama, who is still touring Asia.

The State Department on Tuesday responded immediately to the claims in the statement that east Jerusalem construction had no bearing on the peace process.

“There clearly is a link in the sense that it is incumbent upon both parties ... they are responsible for creating conditions for a successful negotiation,” State Department spokesman P.J. Crowley said. “To suggest that this kind of announcement would not have an impact on the Palestinian side I think is incorrect.”

Barkat: There is no freeze in Jerusalem

Jerusalem Mayor Nir Barkat told The Jerusalem Post that nobody should be surprised because there is no freeze in the city.

“In Jerusalem, we continue building for Jews and Arabs, as a derivative of our outline plans,” Barkat said.

A number of Likud ministers immediately applauded Netanyahu.

Education Minister Gideon Sa’ar said that the nation stands behind him as he defends its right to build in Jerusalem.

Vice Premier Silvan Shalom went further and announced plans to visit West Bank settlements such as Ma’aleh Adumim and the Binyamin region.

At his press conference in Indonesia, Obama said that in spite of the construction in east Jerusalem, his country was committed to a two-state solution based on a negotiated settlement.

“I’m concerned that we’re not seeing each side make the extra effort involved to get a breakthrough that could finally create a framework for a secure Israel living side and side – side by side in peace with a sovereign Palestine,” said Obama.

“We’re going to keep on working on it though, because it is in the world’s interest, it is in the interest of the people of Israel, and it is in the interest of the Palestinian people to achieve that settlement, to achieve that agreement.”

On Monday, Crowley said that the US was mindful of the possibility that “somebody in Israel has made this known in order to embarrass the prime minister and to undermine the process.”

It’s not the first time that east Jerusalem construction has moved forward precisely at a moment when the US and Israel were talking face-to-face about the peace process. Plans for 1,600 new apartments in the Ramat Shlomo neighborhood were advanced during a March visit to Israel by Vice President Joe Biden.

In both cases the projects, which had been initiated a number of years ago, moved one step forward in the planning process, but are far from being finalized.

In New York, Netanyahu told Bloomberg TV he hoped that negotiations with the Palestinians would resume and be finished within a year, and attacked the Palestinians for making an issue of Israel’s resumption of settlement construction in the West Bank.

“I think the settlements are a minor issue,” he said. “And it’s been way overblown – not that it’s not going to be discussed in these negotiations.... It’s just that it hasn’t really blocked the flow of peace.”

He called on the Palestinians to recognize the Jewish nature of the State of Israel, just as his country was ready to recognize their state.

Jonah Mandel, Jordana Horn and Khaled Abu Toameh contributed to this report.

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