A new Israeli settlement project in Jerusalem is casting a shadow over international efforts to revive the peace process. Israel annexed East Jerusalem after capturing it in the 1967 Six-Day War in a move never recognized internationally.
Israeli bulldozers demolished a hotel in a predominately Arab neighborhood of East Jerusalem to make way for new Jewish homes. The Shepherd Hotel, which was purchased by a Jewish-American billionaire in 1985, will be replaced by 20 luxury apartments for Israelis.
Israel says it is a private project and the property was purchased legally. But Palestinians claim East Jerusalem as the capital of a future state, and they say Israeli building there is illegal under international law.
A former Palestinian Minister of Jerusalem Affairs, Ziad Abu Zayyad, says settlements are harming the peace process.
"These are areas in the part of East Jerusalem which was occupied in 1967. And I believe that there will be no chance for any political settlement of the conflict without solving the issue of Jerusalem on the basis of East Jerusalem as the capital of Palestine."
The Palestinians suspended peace talks in September, and they are refusing to return to the negotiating table until Israel stops all settlement construction in East Jerusalem and the West Bank. But Israel claims all of Jerusalem as its capital and says it can build anywhere in the city.
Dore Gold is a former advisor to Israeli Prime Benjamin Netanyahu.
"Jerusalem is the capital of Israel. Israel has sovereignty in all parts of Jerusalem and all Israeli governments, at the height of all past negotiating initiatives, have been building in Jerusalem."
Despite the obstacles, diplomatic efforts are continuing. Israeli and Palestinian envoys will hold separate talks with U.S. officials this week in Washington to try to get the peace process back on track.
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