Israel gave preliminary approval on Wednesday to a plan to build 600 new homes in a settlement deep inside the West Bank, a move that drew rebukes from the United Nations and Palestinians and threatened to raise tensions with the U.S. as the prime minister prepares to head to the White House.
Israeli officials tried to play down Wednesday's decision, saying construction was years away at best.
But the timing of the move may further hinder already troubled Mideast peace efforts. It casts a shadow over a trip by Prime Minister Benjamin Netanyahu to Washington in March, in which he is expected to discuss Iran's nuclear program and other regional issues.
The U.N.'s Mideast envoy, Robert Serry, called the Israeli announcement "deplorable" and said it "moves us further away from the goal of a two-state solution."
Speaking to reporters, State Department spokesman Mark Toner declined to comment about the announcement, but said the U.S. policy on settlement activity is clear.
"We don't believe it's in any way constructive to getting both sides back to the negotiating table. And we want to see clearly a comprehensive settlement that delineates borders and resolves many of these issues."
Israeli-Palestinian peace talks have been stalled for the past three years over the issue of Jewish settlements.
The Palestinians, who claim the West Bank and east Jerusalem for a future state, say there is no point negotiating while Israel continues to expand its settlements. Israel, which captured the areas in the 1967 Mideast war, says negotiations should begin without preconditions. The international community opposes all settlements.
A low-level dialogue launched last month in Jordan failed to make any breakthroughs. On Tuesday, Jordan blamed Israel for the impasse, citing Israel's "unilateral policies."
Israeli defense officials played down Wednesday's decision, saying it was made by a low-level planning committee under the control of the Defense Ministry.
One official said the project was in the "embryonic" phase and would require "multiple stages of authorizations," including approval by top leaders, that would take years to complete.
The officials spoke on condition of anonymity under ministry guidelines.
But Yariv Oppenheimer, director of Peace Now, a dovish group that opposes settlement construction, called it the biggest settlement construction plan in the West Bank since Netanyahu took office three years ago.
Construction is to take place in Shiloh, a hardline settlement nestled in the heart of the West Bank. Peace Now claimed that Wednesday's approval also included retroactive legalization of about 100 homes built without permits. Defense officials could not confirm the claim.
"The government is giving a prize to building offenders and continuing the system by which every time the settlers build without permits, the government approves the construction and allows them even more construction," Peace Now said.
Palestinian spokesman Ghassan Khatib said Wednesday's approval "shows how Israel has no respect for the international community or international laws, while at the same time sheds a light on the ... lack of effective actions by international community toward Israeli settlement policy."
Netanyahu's office did not return requests for comment.
Also Wednesday, Israeli officials said they would invest $130 million over five years to improve roads in Jerusalem's Arab neighborhoods.
Since Israel captured east Jerusalem in 1967, its Arab neighborhoods have not enjoyed the same level of funding the western Jewish sector has received.
Jerusalem Mayor Nir Barkat said the five-year project will improve main thoroughfares, pave new roads and add safety features like traffic dividers.
Daniel Seidemann, an activist who has criticized Israeli policies in east Jerusalem, said the road works could help end decades of inequality. But he said past funding pledges haven't materialized, and said the plan could also be aimed at cementing Israel's control of east Jerusalem.
Israel claims all Jerusalem as its eternal capital, but the Palestinians hope to make east Jerusalem the capital of a future state.
"We are treating Arab neighborhoods as inextricable parts of this city because they are administratively and geographically inseparable," the mayor's spokesman, Barak Cohen, wrote in an email.
About one-third of Jerusalem's 800,000 people are Palestinians. Although they hold residency cards, most do not vote in municipal elections in order to protest Israel's control. This gives them little representation in the halls of power despite their frustrations with urban policy.
In a new reflection of their disgruntlement, a top Muslim official in the Holy Land condemned the city's plans to hold a marathon next month. Now in its second year, the marathon will draw hundreds of Israeli and foreign athletes who will follow a path through Jerusalem's Old City in east Jerusalem.
Palestinian mufti Sheik Mohammed Hussein accused Jerusalem of "using sports to change the demographic reality on the ground."
"They are using pictures of the al-Aqsa mosque, and pictures of the Old City, including pictures of shrines of Muslims and Christians, as propaganda for this marathon," Hussein said. "This gives an indication to the world outside this territory that these areas are part of Israel, while international law says all these areas and places are under occupation."
Spokesman Cohen said this route is "an attempt to showcase the diversity of Jerusalem and its centrality for people of all faiths."
In another development Wednesday, Israel's Supreme Court temporarily lifted a travel ban on a Palestinian human rights activist so he could travel to Geneva to meet with a U.N. official.
Israel has prevented Shawan Jabarin, director of the Al-Haq human rights organization, from leaving the West Bank for the past six years and has kept the reason for the travel ban classified, the activist said in a statement on his organization's website.
The travel ban would still remain in effect upon his return, according to a statement from the court.