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"Israel’s Interior Ministry gave final approval on Thursday to construction of a contentious 1,600-apartment complex in East Jerusalem and said it would soon approve an additional 2,700 housing units there, a move that infuriated the Palestinians and could undercut American efforts to salvage long-stalled Middle East peace talks.
The announcement also provoked an angry reaction from Israeli groups opposed to housing construction in land conquered by Israel in the 1967 Arab-Israeli war. The opposition groups denounced it as an opportunistic way for the Israeli government to exploit a housing shortage that has led to unaffordable rents and mass protests in Israel. Peace Now, the leading anti-settlement group in Israel, condemned what it called the Interior Ministry’s “cynical use” of the housing crisis.
The Interior Ministry announcement came a month before the United Nations annual General Assembly in New York, where Palestinian Authority officials have said they may unilaterally declare statehood, a move that is opposed by both Israel and Israel’s strongest ally, the United States. They favor a resumption of peace talks, which remain stalled partly because of Palestinian objections to Israeli construction on disputed lands. The housing announcement could strengthen Palestinian resolve to proceed with the statehood declaration.
The issue of Israeli housing construction in disputed territory is particularly explosive in East Jerusalem, which Israel annexed after capturing it from Jordan in the 1967 war. Israel’s government has said it regards all of Jerusalem as its capital. But the Palestinians have said they consider East Jerusalem part of a future Palestinian state.
Saeb Erekat, the chief Palestinian negotiator, called the Israeli housing announcement “an assault on international legitimacy and the prospect of the two-state solution.” He also said it was “further proof that this government is committed to investing in occupation rather than peace.”
http://www.nytimes.com/2011/08/12/world/middleeast/12jerusalem.html