JERUSALEM -- Israel unveiled plans yesterday to build 1,120 apartments for Jews in East Jerusalem, a move the Palestinians called a new setback for U.S.-backed peace negotiations.
The announcement by Housing Minister Zeev Boim appeared to be aimed at placating the Shas religious party, which had vowed to quit the coalition government if it conceded anything to the Palestinians on Jerusalem.
Shas had criticized a government freeze on approval of new Jewish housing projects in territory claimed by the Palestinians. Jerusalem's city manager said Monday that the freeze was blocking needed construction in East Jerusalem, but Boim insisted that it applied only in the West Bank beyond the city limits.
"We are building all over Jerusalem within its municipal borders," he told Israel Radio. "What people call delays are in fact final stages of coordination with City Hall."
Boim said construction tenders are being prepared for Jewish homes in two eastern neighborhoods, 750 in Pisgat Zeev and 370 in Har Homa.
Israel captured the eastern part of the city, along with the rest of the West Bank, in the 1967 Middle East war. It later annexed East Jerusalem and built new neighborhoods that are now home to 180,000 Israelis. There are 208,000 Palestinians in East Jerusalem.
Palestinian Authority leaders insist that adding homes to Jewish neighborhoods would prejudice any talks on dividing the city under a peace accord. The Palestinians want East Jerusalem as the capital of a future state.
Israeli Prime Minister Ehud Olmert imposed the housing freeze in December after the Palestinians criticized Israel's plans to build new apartments in a separate project in Har Homa and another in the West Bank settlement of Maale Adumim. The dispute stalled the peace talks for weeks.
Palestinian negotiator Saeb Erekat said yesterday's announcement undermined hopes for a peace agreement.
"Once again we ask the Israeli government to give peace a chance by stopping all settlement activity," he said.
The Bush administration joined the Palestinians in criticizing the earlier housing plans. White House press secretary Dana Perino yesterday said she was not familiar with the new plans, "but, obviously, there's no doubt that an announcement of that sort would make the Palestinians concerned."
The peace effort has been troubled since President Bush, Olmert and Palestinian Authority President Mahmoud Abbas launched it at a Nov. 27 conference in Annapolis. Intensified rocket attacks on Israel from the Hamas-run Gaza Strip, a Palestinian suicide bombing in southern Israel last week, and Israeli threats of a large-scale invasion of Gaza have soured the negotiating climate.
Visiting here last month, Bush said his goal was a peace treaty by the end of his term next January. But Israeli Vice Prime Minister Haim Ramon said Monday the best Israel could hope for by then was a "declaration of principles" for peace that might take two to three years to flesh out.
Ramon, who met with Bush during his visit, said the president's expectations were in line with Israel's.
Despite the setbacks, Israeli Foreign Minister Tzipi Livni and former Palestinian Authority Foreign Minister Ahmed Qureia, the two sides' lead negotiators, held two sessions this week, Livni's spokesman said.
Little about their discussions has been revealed, but Palestinian Authority Prime Minister Salam Fayyad said this week that the talks were not moving quickly enough.
Meanwhile, the Israeli army said yesterday that its troops raided 14 money-changing offices in the West Bank, confiscated nearly $850,000 and arrested five Palestinians on suspicion that funds were transferred from abroad for militants.
RichardBoudreaux writes for the Los Angeles Times.