* 900 new housing units approved for Gilo
* Construction not likely to start for a year or two
* Palestinians say move "shatters" peace efforts
(Adds Palestinian comment and background)
JERUSALEM, July 4 (Reuters) - Israel's Jerusalem
municipality approved a plan on Monday to build hundreds of new
homes for Jews on annexed land in the occupied West Bank, a
council member said.
Elisha Peleg told Reuters that the city planning commission
had approved building plans for 900 new units in Gilo, an urban
settlement built on land Israel captured in a 1967 war and
unilaterally annexed to Jerusalem.
About 500,000 Israelis live in the West Bank and East
Jerusalem, among 2.7 million Palestinians. The World Court has
ruled Israeli settlements in occupied territory illegal.
Palestinians say the enclaves could deny them a viable state.
"I see no difference between Gilo and any other
neighbourhood in Jerusalem. There is no planning or political
problem with this and Jews have the right to build anywhere in
the city," said Peleg, a member of the planning commission.
The proposals still need approval from the Interior Ministry
and construction is not likely to start for a year or two, Peleg
The Palestinians want a capital at Jerusalem for the state
they hope to establish in the West Bank and Gaza Strip.
They say Israeli settlement building around the city, such
as at Gilo, home to 40,000 Israelis between Arab East Jerusalem
and the West Bank city of Bethlehem, will cripple the viability
of any state they set up.
Nabil Abu Rdainah, a spokesman for Palestinian President
Mahmoud Abbas, said the approval "shatters any attempt to lay
down foundations that can lead to a real peace."
In 2009, U.S. President Barack Obama said the building
project, then at an early planning stage, would harm prospects
for peace. A U.S. attempt last year to broker a restart in peace
talks between Israel and the Palestinians stalled almost as soon
as it had begun.
(Writing by Maayan Lubell; additional reporting by Ali Sawafta
in Ramallah; Editing by Kevin Liffey)
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