First praise, then a rebuke: Biden’s Israel visit turns sour

US Vice-President condemns plans for hundreds of new homes in occupied territory

The Israeli government last night managed to overshadow a high-profile visit by the US Vice-President, Joe Biden, with an announcement of controversial and politically highly sensitive plans to build 1,600 new homes for Jewish residents in Arab East Jerusalem.

The announcement from the Interior Ministry – which drew a sharp and swift rebuke from Mr Biden himself – came only hours after the Vice-President had personally congratulated the Prime Minister, Benjamin Netanyahu, for "taking risks for peace".

The disclosure of the plan, infuriating the Palestinian leadership the day after it had finally agreed to US-brokered indirect "proximity" talks with Israel – followed an explicit appeal on Monday by President Barack Obama's Middle East envoy, George Mitchell, to both sides in the conflict "to refrain from any statements or actions which may inflame tensions or prejudice the outcome of these talks".

The Vice-President declared last night that he condemned the "substance and timing" of the announcement, "particularly with the launching of proximity talks" as "precisely the kind of step that undermines the trust we need right now and runs counter to the constructive discussions that I've had here in Israel".

The Interior Ministry had said earlier that there would be 60 days to allow appeals against the plan for a substantial expansion of the existing Ultra-Orthodox East Jerusalem "neighbourhood" of Ramat Shlomo. Most of the international community, which has never accepted Israel's unilateral annexation of East Jerusalem, regards the district as a settlement.

Saeb Erekat, the chief Palestinian negotiator, reacted angrily to news of the expansion. "With such an announcement, how can you build trust?" he said. "This is destroying our efforts to work with Mr Mitchell. It's a really disastrous situation. I hope that this will be an eye-opener for all in the international community about the need to have the Israeli government stop such futile exercises."

Israeli officials indicated last night that the revelation had come as a "surprise" to Mr Netanyahu, who was not consulted about its timing by the right-wing Interior Minister, Eli Yishai, leader of the Sephardic Ultra-Orthodox party Shas, and a key component of Mr Netanyahu's ruling coalition.

In a hasty damage limitation exercise last night, Mr Yishai's spokesman said the meeting of the committee which approved the plan had been "determined in advance" and insisted "there there is no connection to US Vice-President Joe Biden's visit to Israel". His statement added that Mr Yishai had "updated" Mr Netanyahu "this evening".

Nevertheless Palestinian leaders will point to the disclosure as strong evidence of what they see as the relentless growth of Jewish settlement construction in East Jerusalem and a further vindication of the demands they have made – in vain – for a total halt to such expansion in order to improve the atmosphere for negotiations with Israel.

Mr Netanyahu last year rejected the urgings of President Barack Obama for a settlement freeze to help kick-start peace talks and instead announced a 10-month temporary and partial freeze, one which did not stop Israel's announcement on Monday of 112 new homes in the – also Ultra-Orthodox – settlement of Beitar Illit.

The rapid expansion of Ultra-Orthodox housing east of the "green line" that was Israel's border up to the Six Day War in 1967 is driven as much by the desire to accommodate the large families of Israel's rapidly growing Ultra-Orthodox population as by the ideology which informs much of the rest of Jewish settlement in occupied territory.

But that makes little difference to the fears of Palestinians that "facts on the ground" are being created which make it increasingly difficult to envisage the contiguous Palestinian state in the West Bank, East Jerusalem and Gaza which they regard as the only acceptable outcome of peace talks.

Meir Margalit, a Jerusalem council member for the leftist Meretz Party, said that "the fact that Eli Yishai couldn't restrain himself for another two-three days until Biden left Israel means his intention was to slap the US administration in the face". He added that the announcement was "a provocation to the US and to the Prime Minister".

The latest row will create unwelcome difficulties for a visit in which Mr Biden has been seeking to proclaim strong US loyalty to the security interests of Israel – which is increasingly restive about Iran's nuclear ambitions – as well as helping to kick-start negotiations with the Palestinians.

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