Prometheus 6

Israeli Settlement Building Could Hurt Talks: Rice
By REUTERS

Filed at 5:12 a.m. ET

JERUSALEM (Reuters) - Secretary of State Condoleezza Rice said on Sunday Israel's continued settlement building could hurt Israeli-Palestinian peace negotiations.

Rice made the comment as she began her sixth trip to the region this year to try to nudge both sides toward a peace deal by the end of 2008 -- a goal widely viewed as unrealistic.

Disputes over settlements and a corruption scandal that could topple Israeli Prime Minister Ehud Olmert have undercut U.S. efforts to reach a deal before President George W. Bush steps down in January, Israeli, Palestinian and Western officials say.

Israel said on Saturday it planned to build 1,300 new homes in the occupied West Bank in an area it considers part of Jerusalem. Palestinian negotiator Saeb Erekat called the move part of "a systematic policy to destroy" the peace process.

"I am very concerned that at a time when we need to build confidence between the parties, the continued building and the settlement activity has the potential to harm the negotiations going forward," Rice told reporters before she met Israeli Foreign Minister Tzipi Livni and Palestinian leaders.

Israel insists its settlement projects are consistent with longstanding policies that do not contradict the peace efforts. Palestinians fear the enclaves will deny them a viable and contiguous state.

"It's clear to everyone that the Jewish neighborhoods of Jerusalem will remain part of Israel in any possible final status agreement," Olmert spokesman Mark Regev said.

"Building inside those Jewish neighborhoods in no way contradicts our commitment to move forward in the peace process," Regev said.

Israel considers all of Jerusalem -- including the eastern part of the city it captured in a 1967 war and annexed in a move that did not gain international recognition -- to be its "eternal and indivisible" capital.

Palestinians want East Jerusalem to be the capital of the state they aim to establish in the West Bank and Gaza Strip.