Israel decided to accelerate Jewish settlement building on Tuesday, the day after UNESCO awarded the Palestinians full membership of the United Nations cultural agency.
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"Egypt condemns the Israeli decision to accelerate the building of 1,000 units in east Jerusalem and the West Bank," Amr Ali said in a statement.
Israel's decision was a "blow to all efforts exerted to reach a fair settlement to the conflict and Palestinian issue" and also a provocation to Palestinians.
The UNESCO decision was regarded as a diplomatic victory for the Palestinian Authority, which has pushed to be recognized as a state at the UN.
Israel called the UNESCO decision a "tragedy" and the United States said it would stop its funding of the organization.
The forum of top eight ministers on Tuesday concluded its meeting on Israel's response to the accession of the Palestinian Authority into UNESCO.
Following the meeting, Prime Minister Benjamin Netanyahu instructed the government to expedite the construction of some 2,000 housing units in Jerusalem, Gush Etzion and Ma'ale Adumim – all areas that he said would remain within Israel's territory as part of any future arrangement with the Palestinians.
In addition, it was decided to delay the transfer of Palestinian funds to the PA. Jerusalem is also considering revoking the VIP cards of several Palestinian officials and might consider steps against UNESCO's operations in Israel. The forum members are expected to meet again soon to discuss further steps.
A senior government official told Ynet on Monday that "Israel might respond to the Palestinians' unilateral move with specific steps, which may not seem problematic to Israel, but might prompt international objections."
Attila Somfalvi contributed to the report
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