"The prime minister of Israel claims that he has no preconditions (for negotiations), but this decision creates preconditions on the ground," a statement released by Palestinian Prime Minister Salam Fayyad's office said on Tuesday.
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Earlier, the Jerusalem regional planning and construction committee announced the approval of new building plans for Gilo, in east Jerusalem.
The plan includes the construction of small housing units, a boardwalk, public buildings, a school and an industrial zone.
"Netanyahu said that there is no room for unilateral steps but there is no bigger unilateral step than ordering new construction projects on Palestinian land. He told the UN that he was there to tell the truth, but this decision tells the truth for him," the statement said.
Gilo (Photo courtesy of Lowshot)
EU Foreign Policy Chief Catherin Ashton also expressed her disapproval of Israel's decision, telling the EU Parliament that she heard "with deep regret" that Israeli plans to build homes beyond the Green Line were continuing.
"The expansion of settlements threatens the viability of an agreed two-state solution," Ashton said. "This plan should be reversed." Ashton added that she planned to take up the issue again with Prime Minister Netanyahu when she next meets him. "He should stop announcing them and, more importantly, stop building them," she told legislators in Strasbourg, France.
The US State Department said that Washington was "deeply disappointed by Israel's decision on new settlement construction," further dubbing it as "counteproductive." It urged both Israel and the Palestinians not to take steps which could complicate resumption of direct peace talks.
"We are deeply disappointed by this morning's announcement by the government of Israel," State Department spokeswoman Victoria Nuland said.
"We consider this counterproductive to our efforts to resume direct negotiations between the parties and we have long urged both parties to avoid actions which could undermine trust, including in Jerusalem, and will continue to work with parties to try to resume direct negotiations."
France joined in on the criticism of the measure later on Tuesday. The nation's foreign affairs ministry said in a statement that the decision "appears to be a provocation," and is "counterproductive" to the international community's efforts to restart the peace talks between the two sides.
'Give diplomacy a chance'
Meanwhile, it is still unclear how the Palestinian bid for statehood will fare with the UN Security Council.
UN political chief B. Lynn Pascoe said Tuesday that Israel and the Palestinians remain far apart on reaching a peace accord but insisted that "now is time for everyone to give diplomacy a chance."
Pascoe said "the passions of last week" – when Palestinian President Mahmoud Abbas urged leaders to support his bid for UN membership and Israeli Prime Minister Benjamin Netanyahu opposed it without a negotiated settlement – demonstrates the divide.
Speaking at the Security Council's monthly Mideast briefing, Pascoe said that there were "building blocks in place that could help negotiations," which include the Quartet's call for negotiations to resume in one month's time.
Mikati urged the UN Security Council to support the Palestinian bid, saying that "the injustice must end. The Palestinian people must be allowed independence on their land and their country should find its place among the UN's member nations."
The Palestinian Authority, he said, "Has met all the necessary criteria for statehood. We must support the Palestinian demand to end the occupation and return to their land. The greatest danger to peace is Israel's violations of (international) law."
AP, Reuters, Yitzhak Benhorin in Washington and Attila Somfalvi contributed to this report
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