Israel broke ground on a new housing complex for Jews in east Jerusalem on Wednesday, brushing off President Barack Obama's criticism that construction in the disputed part of the holy city undermines efforts to relaunch Mideast peace talks.
The groundbreaking came a day after Israel defied American, European and Palestinian demands to stop settlement activity by announcing it will press forward with construction of 900 apartments in another Jewish area in east Jerusalem.
Speaking to Fox News in Beijing on Wednesday, Obama criticized the plan to build hundreds of homes in Jerusalem's Gilo neighborhood, saying such moves make it harder to achieve peace in the region and embitter the Palestinians in a way he said could be dangerous.
The Palestinians claim the West Bank and east Jerusalem _ areas captured by Israel in the 1967 Mideast war _ for their hoped-for state and have refused negotiations until Israel stops settlement construction in these areas. The Palestinians say the continued growth of settlements on land they claim will make it impossible for them to establish a viable country of their own.
The Israeli government declined to respond to Obama's comments. But earlier in the day, Foreign Minister Avigdor Lieberman said Israel had no intention of stopping the Gilo construction. He called the neighborhood "an integral part of Israel, an integral part of Jerusalem."
The future of east Jerusalem is the most intractable issue in the Israeli-Palestinian conflict. The area includes Jerusalem's walled Old City _ home to sensitive Jewish, Christian and Muslim holy sites. Israel annexed east Jerusalem immediately after the 1967 war and claims all of the city as its eternal capital. The annexation was never recognized by other countries.
Speaking in parliament Wednesday, Prime Minister Benjamin Netanyahu did not address the tensions with the U.S. and ignored an Arab lawmaker who asked why he was allowing the new construction in Gilo.
Instead, Netanyahu reiterated his call for an immediate resumption of peace talks and criticized the Palestinians for refusing to return to the table.
"I hope the Palestinians answer our calls for negotiations," he said. "The Palestinians have groomed themselves with unrealistic expectations."
As he spoke, however, Israel faced a growing torrent of international criticism. The European Union expressed "dismay" over the Gilo project. It said that settlement activity, demolition of Palestinian homes in east Jerusalem and evictions of Palestinian families from contested properties undermine negotiations and "threaten the viability of a two-state solution."
In the West Bank, Palestinian negotiator Saeb Erekat welcomed the international criticism.
He said the Gilo project "provides 900 more reasons why hopes for salvaging the two-state solution and restarting genuine negotiations are rapidly fading, and why Israel is not a partner for peace."
Obama has made restarting the peace talks a top foreign policy goal. To that end, he has demanded that Israel cease building or expanding Jewish settlements in the West Bank and east Jerusalem. But so far, the U.S. has not backed up its criticism with threats against Israel, a close ally.
Some 300,000 Israelis now live in West Bank settlements, while an additional 180,000 Israelis live in Jewish neighborhoods built in east Jerusalem.
Israel has offered to restrain construction in the West Bank, but it says it will build homes anywhere it wants in Jerusalem.
The Jerusalem municipality on Thursday issued a statement detailing plans to build 5,000 new housing units for Palestinians in three neighborhoods in the eastern sector. Jerusalem's Israeli mayor, Nir Barkat, rejected U.S. criticism of the building projects for Jews.
"The city is working to respond to the needs of its Jewish and Arab residents equally," Barkat was quoted as saying.
Underscoring Israel's claim to the city, a member of the Israeli parliament and American Jewish visitors held a groundbreaking ceremony for another construction project in east Jerusalem on Wednesday.
The lawmaker, from Netanyahu's Likud Party, accused Obama of making a "racist demand" by ordering Israel to halt settlement activity.
"President Obama should not interfere with the rights of the Jewish people to live in Jerusalem," said lawmaker Danny Danon. "This ... is a racist demand, saying that Jews cannot live in Jerusalem, only Arabs."
The ceremony kicked off construction of 124 new apartments in a Jewish housing complex called Nof Zion, or "View of Zion," near the Arab neighborhood of Jabel Mukaber.
Six salmon-colored condo buildings and a playground already stand on the hillside, with a commanding view of a number of Arab neighborhoods and Jerusalem's Old City. A number of Arab homes and shops lie nearby.
The entire complex, expected to be complete in 2015, will contain a synagogue, a community center, a luxury hotel and 400 apartments, priced at between $371,000 to $690,000, said Rinat Sylvester, head of marketing for the complex.
At the ceremony, New York State Assemblyman Dov Hikind said Obama's call to stop Jewish settlement amounted to "segregation."
Critics call settlements discriminatory since they provide roads, housing and infrastructure for Jewish residents, while they are off limits for Arabs living nearby.