Work began on Sunday at the Shepherd Hotel in East Jerusalem, with the aim of creating apartments for Jewish families.
U.S. Secretary of State Hillary Clinton condemned the construction on Sunday, saying Israel's move to proceed with an East Jerusalem settlement project by razing a derelict hotel undermined the peace effort.
The hotel was purchased 25 years ago by settler patron and American Jewish businessman Irving Moskowitz. When conferred 18 months ago, authorization for conversion of the hotel, located in the Arab neighborhood of Sheikh Jarrah, caused a political storm.
"This disturbing development undermines peace efforts to achieve the two-state solution," Clinton said yesterday in a statement made in Abu Dhabi, where she is on an official visit.
"In particular, this move contradicts the logic of a reasonable and necessary agreement between the parties on the status of Jerusalem," she added.
The Shepherd Hotel controversy marked the first in a series of disputes between the Netanyahu government and the Obama administration over construction in East Jerusalem. The building became a symbol of settlement plans in East Jerusalem for two primary reasons. First of all, the facility will become an entirely new compound for Jewish residence in the heart of the foreign consulates area of East Jerusalem. This will be a new facility, rather than the expansion of an existing Jewish neighborhood.
Second, the hotel was built by Haj Amin al-Husseini, the mufti of Jerusalem in the 1940s. The fact that the mufti, the Zionist movement's most prominent rival, never actually lived in the building himself has not stopped right-wing activists from boasting about "conquering" the facility from Haj Amin.
"These sounds [of demolition] have a special tint. It's like destroying the home of Hitler or Himmler," said Daniel Luria, one of the heads of the Ateret Cohanim group, which has been involved in the project.
Settlers have held valid building clearances since last March, and they could have started work at any time. In the past, right-wing activists indicated that they did not want to start construction at a time that might compromise the prime minister's dealings with the Americans.
On Sunday, bulldozers destroyed parts of the hotel that were added when the area was under Jordanian control. Work will reportedly continue for several months.
On the left, spokesman castigated the initiation of this project. "[Prime Minister Benjamin] Netanyahu has decided to detach himself from the world, and allow Irving Moskowitz and his friends on the extreme right to take control of East Jerusalem," declared Yariv Oppenheimer, secretary-general of the organization Peace Now. "With the support of the government, and conducting themselves like thieves in the night, the settlers are damaging Israel's international status and destroying hopes of a peace agreement."
Activists from the Ir Amim non-profit group presented legal opinions on Sunday, holding that even at this stage, after all work authorizations have been conferred, the government can still annul the project and prevent construction. According to Ir Amim, this undermines a view widely supported in the government - that it cannot exert influence on a construction plan submitted privately to planning authorities.
The right praised the start of the work. Jerusalem Deputy Mayor David Hadari said the construction effort will "promote the spread of Israeli sovereignty in all parts of the city, and help realize the right of Jews to settle in all parts of Jerusalem."
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