Israel OK's Building of Homes in East Jerusalem

Israel's government has approved the construction of 238 homes in Jewish neighborhoods in east Jerusalem, ending an unofficial freeze on new building there for nearly a year.

The announcement was released by Israel's Housing Ministry. The office of Prime Minister Benjamin Netanyahu would not comment Friday.

Israeli officials said they discussed the construction in the neighborhoods of Ramot and Pisgat Zeev with the U.S. administration and cut the number of planned units to temper American displeasure.

An Israeli settlement slowdown imposed last November in the West Bank did not officially include east Jerusalem, which Israel considers part of its capital. But before Friday, Israel had quietly halted building there as well.

Carter: Israel Must Halt Settlements
U.S. to Israel: Halt West Bank Settlements
Carter: Israel Must Halt Settlements
Israel Settlement Freeze Over; Peace Talks Too?

The issue of Israeli settlement building is threatening to derail recently renewed Mideast peace talks.

The Palestinian Authority dubbed the announcement of the construction plans in East Jerusalem the last nail in the coffin of the peace talks, reports CBS Radio News correspondent Robert Berger.

Chief Palestinian Negotiator, Dr. Saeb Erakat, said in a statement to CBS News that Netanyahu, "has made his choice: settlements over peace."

"This decision shows that the position of the Israeli Prime Minister has not changed. Instead, he continues to take every possible step to prevent the establishment of a sovereign Palestinian state. By tendering in the occupied Palestinian territory Netanyahu has once again demonstrated why there are no negotiations today," read the official Palestinian response.

Netanyahu had offered on Monday to renew the moratorium on settlement construction in the West Bank, but only if the Palestinians met his demand to recognize Israel as a Jewish state.

The proposal was the first time Netanyahu had publicly suggested a way to end the impasse over settlement construction that has stalled Mideast peace talks just a month after they were launched at the White House. Palestinians swiftly rejected his condition.

The Palestinians refuse to recognize Israel as a Jewish state, saying it discriminates against Israel's Arab minority and denies the rights of Palestinian refugees and their descendants to return to their homes in what is now Israel. They said it is sufficient that they recognize Israel's right to exist, but not up to them to determine Israel's character.

Palestinian negotiator Saeb Erekat accused Netanyahu of "playing games" by linking settlements and Israel's national character.

"I don't see a relevance between his obligations under international law and him trying to define the nature of Israel," he said. "I hope he will stop playing these games and will start the peace process by stopping settlements."