French Foreign Minister Bernard Kouchner said Wednesday night that the preliminary approval given to build 900 units in Gilo, while regrettable, would not stop the diplomatic process. Kouchner, speaking after a day of meetings in Israel with the government's top leadership, said he understood that the decision was not a political one made by Prime Minister Binyamin Netanyahu. He added that the move, which could see the expansion of the Jewish Jerusalem neighborhood, situated over the Green Line, did not have to be an obstacle to returning to negotiations. Kouchner, speaking in French, addressed reporters after a ceremony in Jaffa bestowing a high French honor on former minister and MK Yossi Beilin for his work over the years on the peace process. In his remarks, Beilin said that within the next few days Netanyahu is going to declare a 10-month moratorium on settlement construction. "The Americans will say it's not enough, but it is enough to resume negotiations," said Beilin, an architect of the Oslo accords. He noted that the settlement freeze wouldn't include Jerusalem and would allow building for natural growth in settlements. He warned, though, that the Palestinians would reject the move, resulting in "a dangerous vacuum created in which there is a real danger that the Palestinian Authority will fall apart." Kouchner, when asked by The Jerusalem Post whether Netanyahu gave him any indication in their meeting Wednesday that he was on the verge of declaring a ten-month moratorium, said Netanyahu did not answer the question clearly because "I didn't clearly ask the question. This is a bit more complicated." Kouchner intimated that the issue was largely one of precise timing, but would not elaborate. Regarding Palestinian threats to unilaterally declare a state, Kouchner - who met Palestinian Authority President Mahmoud Abbas in Amman on Tuesday - said it was clear that the Palestinians did not intend to unilaterally declare a state, but rather were interested in "attracting the attention of the world to the necessity of setting up a Palestinian state." Asked if France would accept such a declaration, Kouchner said, "I'm sorry to say that the UN system doesn't work like that, but we are in favor of a Palestinian state that is recognized, united, democratic and recognizes the security of the State of Israel." Kouchner said he expected Netanyahu "to give a signal to encourage Abu Mazen and offer him an incentive, a drop of hope in the ocean of uncertainty." Kouchner arrived on Tuesday night and met with President Shimon Peres, Netanyahu, Foreign Minister Avigdor Lieberman, Defense Minister Ehud Barak and Opposition Leader Tzipi Livni before leaving last night for Kabul. Meanwhile, US President Barack Obama on Wednesday addressed the settlement issue in a TV interview. "I think that additional settlement building does not contribute to Israel's security," he told Fox News. "I think it makes it harder for them to make peace with their neighbors. I think it embitters the Palestinians in a way that could end up being very dangerous." He also noted that, "The situation in the Middle East is very difficult, and I've said repeatedly and I'll say again, Israel's security is a vital national interest to the United States, and we will make sure they are secure." The American criticism of plans for future expansion of Gilo have sparked outrage among many Israelis. Sources close to Prime Minister Binyamin Netanyahu insisted that the PM would not accept any restriction on building in Jerusalem. And Livni, not usually inclined to side with the government, sent out a statement supporting Israel's right to build in Gilo. "Gilo is part of the Israeli consensus," she said. "This understanding is important for any future talks on the final borders; in any final status agreement Gilo is part of Israel's final borders." Neither the Prime Minister's Office nor the Foreign Ministry, however, would comment on Obama's statements to Fox News, and the PMO gave a directive to the cabinet ministers not to respond out of fear of exacerbating the situation. While Israelis expressed disapproval of Obama's response, Middle East expert David Makovsky noted that from the American position the timing of the Gilo planning was particularly problematic. "It comes at a sensitive juncture when the US is trying to find ways to bring Israelis and Palestinians back to the table, right after Obama and Netanyahu had a heart-to-heart [meeting] that they've never had before â€¦ to try to rebuild trust," said Makovsky, co-author of Myths, Illusions and Peace. "A move like this is not bound to enhance trust," he said of the Gilo construction and the impression it creates of Israeli intentions. "It's going to lead to critics in Washington suspecting the worst." Scott Lasensky of the US Institute for Peace put it more pointedly, saying, "Upsetting the status quo in east Jerusalem contradicts the spirit of Prime Minister Netanyahu's call for an immediate resumption of negotiations. Whether or not Jerusalem is a consensus issue in Israel is irrelevant if this Israeli government expects to be taken seriously in the diplomatic arena." At the same time, Israel on Wednesday also took steps to ease the housing crunch in the Arab sector and demonstrate that Gilo was not the only Jerusalem neighborhood likely to be expanded. The Jerusalem Municipality in the evening announced that plans were being advanced for the construction of more than 5,000 new housing units for Arab residents of the capital. The announcement, which came on the heels of seven demolitions of illegal buildings in east Jerusalem over the last two days, stated that the construction of 2,000 housing units in Tel Adasah, in north Jerusalem, and 2,500 new housing units in a-Swahra, near Jabel Mukaber, were both pending approval by the relevant municipality committees. Additionally, the announcement stated, the construction of 500 new housing units in Dir-al-Amud, near Beit Safafa, were already in the advanced stages of planning. Plans for another 172 units in Jabel Mukaber, the announcement added, were in the final stages of approval and were set to appear before a municipality committee for approval. The announcement also said that plans for additional housing in Abu Tur and Sur Bahir were forthcoming as well. Jerusalem Mayor Nir Barkat said in a statement that the municipality was working to ensure that all segments of the capital's population were able to construct new housing projects in all the different neighborhoods of the city. "In Jerusalem there is a demand for housing in all parts of the city," the statement from Barkat read. "And the Jerusalem Municipality is working to provide for the housing needs of both Arabs and Jews in an equal manner."