Vice Premier Haim Ramon responded on Sunday to criticism of plans to build homes on occupied land in the Jerusalem area by saying parts of the city must be given to the Palestinians to avoid losing US support.
But he also said that Israel would not give up the settlement where the building plan announced last week sparked Palestinian anger and a warning from US Secretary of State Condoleezza Rice that it risked harming a peace process she helped relaunch last month at the Annapolis conference.
Israel has rejected criticism of a tender for some 300 more homes in the Har Homa on the grounds that the neighborhood is inside Jerusalem's city boundaries and as such does not constitute a settlement.
Ramon said that Prime Minister Ehud Olmert's opponents were being unrealistic in hoping for US support for any peace plan that would give the Jewish state all the present Jerusalem municipality, which includes Arab East Jerusalem, as its capital.
''We must come today and say, friends, the Jewish neighborhoods, including Har Homa, will remain under Israeli sovereignty, and the Arab neighborhoods will be the Palestinian capital, which they will call Jerusalem or whatever they want,' Ramon told Israel Radio. ''Then we won't get embroiled, as is happening now, in an uncalled-for and badly timed debate with the United States, at a time when we need its support.''
Palestinian Foreign Minister Riad Malki denounced Ramon's statement and its timing: On Wednesday, negotiating teams from both sides are to sit down together for their first formal talks in seven years.
''These statements place obstacles before any serious attempts by Palestinian negotiators on Jerusalem,'' Malki said. ''They aim to create confusion and change the course of negotiations before they begin. They try to pressure Palestinians and the international parties to think of Israeli needs before they begin.''
Israel's Housing Minister, Zeev Boim said on Saturday that it was Israel's right to build in Har Homa - and everywhere else in the expanded boundaries of Jerusalem.