Housing Move in Israel Seen as Setback for a Two-State Plan

By JODI RUDOREN and MARK LANDLER

JERUSALEM — Israel is moving forward with development of Jewish settlements in a contentious area east of Jerusalem, defying the United States by advancing a project that has long been condemned by Washington as effectively dooming any prospect of a two-state solution to the Israeli-Palestinian conflict.  

A day after the United Nations General Assembly voted overwhelmingly to upgrade the status of the Palestinians, a senior Israeli official said the government would pursue “preliminary zoning and planning preparations” for a development that would separate the West Bank cities of Ramallah and Bethlehem from Jerusalem. If such a project were to go beyond blueprints, it could prevent the creation of a viable, contiguous Palestinian state. 

The development, in an open, mostly empty area known as E1, would connect the large settlement town of Maale Adumim to Jerusalem. Israeli officials also authorized the construction of 3,000 new housing units in parts of East Jerusalem and the West Bank.

The timing of the twin actions seemed aimed at punishing the Palestinians for their United Nations bid, and appeared to show that hard-liners in the government had prevailed after days of debate over how to respond. That represented a surprising turnaround, after a growing sense that Israeli leaders had acceded to pressure from Washington not to react quickly or harshly. 

The Obama administration swiftly condemned the move as unhelpful. Senior officials expressed frustration that it came after Israeli officials had played down the importance of the Palestinian bid and suggested that they would only employ harsh retaliatory measures if the Palestinians used their new status to go after Israel in the International Criminal Court.

“We reiterate our longstanding opposition to settlements and East Jerusalem construction and announcements,” a spokesman for the National Security Council, Tommy Vietor, said. “We believe these actions are counterproductive and make it harder to resume direct negotiations or achieve a two-state solution.” 

Secretary of State Hillary Rodham Clinton, in a speech on Friday night in Washington, criticized Israel’s decision to proceed with plans for construction without referring to any settlements directly by name. “These activities set back the cause of a negotiated peace,” she said at the Saban Forum at the Brookings Institution. 

Israel gave the United States only a few hours’ notice of the plan, a senior official said. President Obama did not call Prime Minister Benjamin Netanyahu, the official said.

For Mr. Obama, whose most bitter clashes with Mr. Netanyahu have come over settlements, the Israeli move could undermine a series of developments in recent weeks — from the violence in Gaza to the Palestinian vote — in which the two leaders appeared to draw closer together.

For years, American and European officials have told the Israelis that E1 is a red line. The leaked, somewhat vague, announcement of plans to proceed with building is the diplomatic equivalent of what the Israeli military did last month when it massed tens of thousands of ground troops at the Gaza border. It is a potent threat that may well, in the end, not be carried out because the Israeli government worries about its consequences. 

The Palestinian Authority described the plan as “a new act of defiance from the Israeli government.” Saeb Erekat, the chief negotiator, said in a statement, “At a moment where the Palestinian leadership is doing every single effort to save the two-state solution, the Israeli government does everything possible to destroy it.” 

Mr. Netanyahu’s office declined to comment on the zoning and construction decisions, which were made Thursday night around the time of the General Assembly vote. 

But Israel has long maintained its right to develop neighborhoods throughout East Jerusalem and the West Bank — more than 500,000 Jews already live there — and Mr. Netanyahu, responding to the United Nations speech by President Mahmoud Abbas of the Palestinian Authority, said, “Someone who wants peace does not talk in such a manner.” 

While Israel has frequently announced settlement expansions at delicate political moments, often to its detriment, the E1 move came as a shock to many after a week in which both Israelis and Palestinians toned down their talk about day-after responses to the United Nations bid.

Avigdor Lieberman, the ultranationalist foreign minister who for months denounced the Palestinian initiative as “diplomatic terrorism” and said Israel should consider severe sanctions against the Palestinian Authority, had told reporters in recent days that there would be “no automatic response.” 

Mr. Lieberman, who spoke before Mrs. Clinton at the Saban Forum, castigated Mr. Abbas as a failed politician who had sought to upgrade the Palestinians’ status to divert attention from an ailing economy at home. 

Mr. Erekat’s spokesman declined to discuss whether the Palestinians would use their upgraded status, as a nonmember observer state with access to United Nations institutions, to pursue a case in the International Criminal Court, regarding E1 or the other settlement expansion. 

Less contentious moves were already in progress: the Palestinian Authority has begun changing its name to “Palestine” on official documents, contracts and Web sites, and several nations are considering raising the level of diplomatic relations, giving Palestinian envoys the title of ambassador. 

All but one European country, the Czech Republic, voted with the Palestinians or abstained in Thursday’s United Nations vote, many of them citing concerns about settlements in West Bank and East Jerusalem territories that Israel captured in the 1967 war. The settlement of E1, a 4.6-square-mile expanse of hilly parkland where some Bedouins have camps and a police station was opened in 2008, could further increase Israel’s international isolation. 

“This is not just another few houses in Jerusalem or another hilltop in the West Bank,” said Daniel C. Kurtzer, a former American ambassador to Israel and Egypt. “This is one of the most sensitive areas of territory, and I would hope the United States will lay down the law.”

After a day in which Israeli government officials insisted that the United Nations vote was a purely symbolic one that had not changed anything on the ground, the revelation of the development moves late Friday stunned and outraged even some of Mr. Netanyahu’s supporters. 

“A number of important countries are telling us that they think it’s wrong to do settlements, and these are our best friends,” noted one senior Israeli government official, speaking on the condition of anonymity for fear of being fired. “After they say this directly or indirectly, the immediate response is to build more settlements, even in one of the most controversial areas, E1? How does that make sense? What is the message the government is sending its best friends?” 

Dani Dayan, the leader of Israel’s settler movement, said the development of E1 was an “important Israeli strategic interest,” but he, too, was somewhat dismayed by the timing. “We don’t like the idea of developing our communities as a sort of retaliatory or punitive step,” he said. 

Shelly Yacimovich, head of the left-wing Labor Party, also questioned the strategy. “Construction in the Jewish neighborhoods of Jerusalem is not controversial,” she said Friday night in a television interview. “But to do this now? That’s sticking a finger in the eye.”

It is hardly the first time Israel has been criticized for bad timing on settlement expansion. In August 2011, a month before a previous bid by Mr. Abbas for upgraded status at the United Nations Security Council, Israel’s Interior Ministry gave final approval for the construction of a 1,600-unit apartment complex in the East Jerusalem neighborhood of Ramat Shlomo. 

On the eve of an April 2011 meeting between Mr. Obama and Israel’s president, Shimon Peres, a Jerusalem planning committee gave its go-ahead for 1,000 units. And in 2010, Mr. Netanyahu was embarrassed by an early approval of the Ramat Shlomo development hours after a Jerusalem visit by Vice President Joseph R. Biden Jr. 

But E1 — where a plan approved years ago calls for 3,910 housing units, 2,192 hotel rooms and an industrial park, in addition to the police station — is more contentious than all those projects combined. Presidents Obama, George W. Bush and Bill Clinton have all strenuously objected to any settlement there. 

Dani Seidemann, a Jerusalem lawyer and peace activist, described E1 as “the fatal heart attack of the two-state solution” and said Mr. Netanyahu was wielding “the doomsday weapon.” 

Still, he and others noted that the approval was only for zoning and planning, early steps in a long development process before bulldozers begin work, and could be just what he called “the dramatic flourish.” 

That may be why the announcement is so vague. Turning the plans into reality is likely to take years. On the other hand, just asserting that such steps are being considered is a way of signaling Israel’s readiness, after having lost a key battle at the United Nations, to engage fully in the diplomatic war over the future of the West Bank and East Jerusalem. 

Jodi Rudoren reported from Jerusalem, and Mark Landler from Washington. Michael R. Gordon contributed reporting from Washington, Peter Baker from Hatfield, Pa., and Ethan Bronner from New York.