THE Israeli government last night approved the construction of a new Jewish neighbourhood on the edge of Jerusalem, defying US and European objections and Palestinian warnings of a collapse in peace efforts. The development will be on land which Israel considers part of its sovereign capital, but which the Palestinians regard as occupied territory.
Announcing the move, the Israeli Prime Minister, Mr Benjamin Netanyahu, urged the Palestinians to react "with restraint". But a spokesman for the Palestinian President, Mr Yasser Arafat, called the project a breach of the peace accords.
Confirming ministerial approval for an initial 2,456 unit housing development at Har Homah, an area captured by Israel from Jordan in the 1967 war, Mr Netanyahu insisted that the project did not contravene the Oslo peace framework, since this placed no limits on housing "within the municipal boundaries of Jerusalem".
But Dr Hanan Ashrawi, a cabinet minister from the Palestinian Authority, rejected this, accusing Israel of pre empting negotiations on the final status of the city.
"Israel is totally disregarding its commitments," she said. "These steps will derail the peace process.
Mr Arafat, urged the United Nations and the Arab League to take action. He has also written a letter of protest to President Clinton.
The US criticised Israel's decision but analysts expected Washington to avoid a major confrontation.
"The decision taken today further complicates an already complicated situation," said a White House spokesman, Mr David Johnson.
An aide to Mr Netanyahu said building could begin shortly.
"It will probably take, if I know the bureaucracy, about two weeks for it to be translated from a government decision into action in the field," Mr David Bar-Illan said.
Mr Netanyahu said the development was principally intended to alleviate a chronic housing shortage. A second phase of building at Har Homah, however, will add another 4,000 homes to the 2,456 approved yesterday, and Palestinians believe the most significant aim of the project is to separate south eastern Jerusalem from the West Bank, undermining Palestinians claims to the city.
Although the Israeli government has been in recent contact with the Palestinian leadership there have been no direct contacts between Mr Netanyahu and Mr Arafat. The Israelis expect that a speech by Mr Arafat in Nablus today will set the tone for Palestinian reaction.
Mr Arafat is to fly to Washington early next month. Mr Netanyahu's hope is that, with that visit and a new phase of Israeli West Bank withdrawals imminent, the Palestinian leader will want to maintain calm.
But there are no guarantees of that, or of Mr Arafat's ability to keep the lid on popular protest even if he wants to.
. The Tanaiste and Minister for Foreign Affairs, Mr Spring, said the project was disappointing. He added it was "especially regrettable as it undermines confidence in the peace process which was beginning to be restored following the Hebron agreement ...
"The European Union has repeatedly stated, and did so again at the European Council in Dublin in December last, that settlements in the Occupied Territories contravene international law and are a major obstacle to peace."
Mr Spring called on Mr Netanyahu's government to reconsider the decision.
David Horovitz is managing editor of the Jerusalem Report