"Yesterday's activities at the Shepherd Hotel were conducted by private people in accordance with Israeli law. The Israeli government had nothing to do with the events. The State of Israel cannot be expected to forbid Jews to buy private property in Jerusalem," the statement said.
"Just like Jerusalem's Arab residents are allowed to buy or rent property in Jerusalem neighborhoods with a Jewish majority, Jews are allowed to buy or rent property in Jerusalem neighborhoods which have an Arab majority."
The Shepherd Hotel in Sheikh Jarrah was demolished Sunday morning by the Jewish developer who purchased the land after receiving a building permit from the municipality at the beginning of the year for the construction of a new Jewish neighborhood at the site. Some 20 housing units are expected to be built in the area.
US Secretary of State Hillary Clinton slammed the move, calling it "a disturbing development which undermines peace efforts to achieve the two-state solution."
EU representatives have suggested having officials present at the site of imminent house demolitions or evictions and intervene if non-violent Palestinians face arrest in east Jerusalem.
In a new confidential report published by British newspaper Independent on Monday, 25 EU consuls-general in Jerusalem say the Jewish settlement activity in east Jerusalem jeopardizes the two-state solution and complicated the conflict in the region.
"If current trends are not stopped as a matter of urgency," the document said, "the prospect of east Jerusalem as the future capital of a Palestinian state becomes increasingly unlikely and unworkable. This, in turn, seriously endangers the chances of a sustainable peace on the basis of two states, with Jerusalem as their future capital."
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