Pressure from pro-Palestinian groups has forced a French multinational to drop out of an Israeli light rail project that cuts into disputed east Jerusalem, a would-be Israeli partner in the project said Sunday.France's Veolia disputed the assertion, which would bolster an international campaign to boycott companies supporting Israel's occupation of the West Bank and east Jerusalem. Palestinians claim both areas for part of their future state.Veolia originally had planned to sell its 5 percent stake in the project to Israeli company Dan bus lines, but later sold it to a rival. Dan is now suing Veolia."As Veolia told Dan, at some point in 2009 or thereabouts, because of heavy political pressure applied to French Veolia by pro-Arab and anti-Israel sources to halt its activity in the Jerusalem area, and in light of legal proceedings instituted against French Veolia beforehand in connection with the Jerusalem light rail, Veolia decided to end its involvement in the project," Dan spokesman Eitan Fixman told The Associated Press.Yoni Yitzhak, spokesman for Veolia Israel, denied the company had succumbed to political pressures."All decisions by Veolia Israel are based on financial, not political, considerations," Yitzhak said.Palestinians hope to derail the $1 billion tram because they fear it will further entrench Israeli control over east Jerusalem, the part of the city they want as a capital. They asked a French court to force two French multinationals, Veolia and Alstom, out of the project and have urged Arab countries to cancel contracts with the two companies.The 9-mile (14-kilometer) line runs from Jewish west Jerusalem to the largest of several settlements Israel built in the traditionally Arab eastern sector after capturing it in 1967.Palestinians say Israel is creating more facts on the ground with the rail line, as it has with Jewish enclaves in east Jerusalem that are now home to some 200,000 Israelis.The light rail will service Arab and Jew alike.