Vice premier defends construction project in contested Jerusalem neighborhood but says Israel should consider handing over the city's Arab areas to the Palestinian Authority so as not to lose crucial US support But he also said that Israel would not give up the settlement where the building plan announced last week sparked Palestinian anger and a warning from US Secretary of State Condoleezza Rice that it risked harming a peace process she helped relaunch last month at the Annapolis conference.
Israel has rejected criticism of a tender for some 300 more homes in the Har Homa on the grounds that the neighborhood is inside Jerusalem's city boundaries and as such does not constitute a settlement.
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