Israeli Prime Minister Benjamin Netanyahu is defending a settlement project in East Jerusalem that drew criticism from U.S. Secretary of State Hillary Clinton.
Mr. Netanyahu said Monday that Jews can buy or rent property in predominantly Arab neighborhoods in Jerusalem, just as Arabs can buy or rent property in the predominantly Jewish neighborhoods in the city.
U.S. Secretary of State Hillary Clinton strongly criticized Israel Sunday for the demolition of a derelict but historic East Jerusalem hotel to make way for 20 new Jewish homes.
In a statement from Abu Dhabi, Clinton said the destruction of the Shepherd Hotel to make way for a new Israeli housing development "contradicts the logic" of Israel and the Palestinians negotiating a solution to their differences over Jerusalem. She said the United States is "very concerned" about the demolition.
Mr. Netanyahu said the government was not involved in the settlement project, but that it would never act to ban Jews from purchasing private property in the city.
The 20-apartment project also has angered Palestinian leaders, who said direct peace talks with Israel will continue only on the condition that construction is halted in East Jerusalem as part of a freeze on Jewish settlements.
U.N. Secretary-General Ban Ki-moon also condemned the project on Monday, saying it only serves to "heighten tensions."
Construction crews knocked down the Shepherd Hotel on Sunday. It was built in the 1930s as the residence of the Muslim grand mufti of Jerusalem at the time, Haj Amin Husseini, who fought the British and Zionists and became a World War Two ally of Nazi leader Adolf Hitler.
The Israeli-run Jerusalem municipality approved the project in 2009.
The Palestinians want East Jerusalem as the capital of a future state, while Israel considers all of Jerusalem its "eternal and indivisible" capital. Israel annexed East Jerusalem after capturing it in the 1967 Six-Day War, in a move never recognized internationally.