In any plan floated over the past decade for a two state solution with land swaps, these neighborhoods would end up on the Israeli side of the border. What is holding up the peace process is the Pal Arab leadership's refusal to return to face to face negotiations, which is being enabled by stupid statements like this from European, UN and other poorly informed people.
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Preliminary report: Shooting attack in East Jerusalem's Damascus Gate (Haaretz)
from the article: Germany: Israel plan for new West Bank homes 'devastating' to peace