EU foreign policy chief
EU foreign policy chief Catherine Ashton Photo by Reuters
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Settlement building on occupied Palestinian territory is illegal, the European Union reminded Israel on Sunday, after a historic hotel in East Jerusalem was partly demolished to make way for a Jewish apartment complex.

"I strongly condemn this morning's demolition of the Shepherd Hotel and the planned construction of a new illegal settlement," the EU's foreign policy chief Catherine Ashton said in a statement.

"I reiterate that settlements are illegal under international law, undermine trust between the parties and constitute an obstacle to peace," Ashton added.

Israeli bulldozers cleared the way on Sunday for 20 new homes in East Jerusalem, demolishing a wing of a derelict hotel in a settlement project that has angered Palestinians and drawn U.S. objections.

Construction at the Shepherd Hotel compound, whose ownership is contested, was likely to deepen Israeli-Palestinian acrimony as Washington tries to revive peace talks stalled by a dispute over Israel's settlement policy in the West Bank and East Jerusalem, areas captured in the 1967 Six-Day War.

Ashton reiterated that "the EU does not recognize" the annexation of East Jerusalem by Israel, and also expressed concern for recent violence in the West Bank, amid escalating Israeli-Palestinian tension.

British Foreign Office Minister Alistair Burt also responded to reports that work has begun to enable creation of a new illegal settlement in occupied East Jerusalem, and said that “the British Government reaffirms its strong, long-standing opposition to the creation of this new illegal settlement in occupied East Jerusalem and condemns today’s demolition in Sheikh Jerrah. The establishment and expansion of settlements in the occupied Palestinian territories are illegal."

"We oppose provocative unilateral actions such as this, which hinder efforts to resume talks between the two parties leading to a two-state solution to this conflict, with Jerusalem as the shared capital of the two states living side by side in peace and security. That is the way forward. This latest settlement activity does not help – on the contrary, it raises tensions unnecessarily," he added.

"We see this matter as extremely dangerous," said Hatem Abdel Qader, the Palestinian official who oversees Jerusalem affairs for President Mahmoud Abbas' Fatah movement.