Prime Minister Ehud Olmert said Monday that Israel would keep expanding a neighborhood in eastern Jerusalem, defying international criticism and triggering a spat with the Palestinians ahead of a new round of peace talks.
The premier was speaking at a press conference in Jerusalem with German Chancellor Angela Merkel.
In one of the highlights of Merkel's three-day visit marking the 60th anniversary of Israel's creation, the two countries upgraded their ties, giving Israel a rare status in Germany shared by France, Italy, Spain, Poland and Russia.
Olmert told reporters that Har Homa, a neighborhood in the section of Jerusalem claimed by the Palestinians, is an inseparable part of the capital. He said Israel would continue building in those areas of Jerusalem, including Har Homa, that it expects to keep under a final peace agreement.
"Everyone knows that there is no chance that the State of Israel will give up a neighborhood like ... Har Homa. It is an inseparable part of Jerusalem," Olmert said during the press conference.
Palestinian negotiator Saeb Erekat said Olmert's comments "cannot stand" and that the Palestinians delivered that message directly to Israel's chief negotiator, Foreign Minister Tzipi Livni. "This is absolutely unacceptable," Erekat said.
Palestinian negotiator Ahmed Qureia, who resumed halted peace talks with Livni on Monday, said he downgraded the meeting to unofficial to protest the construction plans.
The prime minister has promised not to build any new settlements, but said Israel expects to maintain control of the Jewish neighborhoods of East Jerusalem and major settlement blocs in the West Bank as part of a final peace deal.
Construction in these areas has continued, and the government plans to build hundreds of new apartments in Har Homa. The U.S. has said such construction is unhelpful to peace efforts, and the Palestinians say the project is undermining peace talks.
"We have announced that there will be places where there will be additional building. These are places that will remain with Israel in any constellation, and this includes first and foremost Jerusalem, and everyone knows it," he said Monday.
Merkel said she had raised the issue of settlement construction with Olmert and noted that halting settlement activity is part of the road map. "We agree that all sides should try as much as possible to keep their obligations, and I've pointed out that both sides have things left to do," she said.
German and Israeli ministers hold joint cabinet session
Merkel and Olmert chaired a historic joint session of members of the German and Israeli cabinets, at which both governments signed off on a range of projects, including in education, the environment and defense. The two sides agreed to hold such meetings once a year, alternating as hosts.
"When you're talking about relations with any country, it's a very impressive event," Olmert said after the meeting. "But when it's the relations between the state of Israel and Germany, it's something with content, significance and symbolism that are incomparably deep."
The two sides seek to "strengthen and intensify their political, cultural, economic and social relations as a partnership of democratic and pluralistic nations," a joint statement said.
Germany already has similar arrangements with France, Italy, Spain, Poland and Russia, while it is the first time Israel is entering into such an agreement.
The new cooperation deal underscores Germany's role as one of Israel's staunchest political allies in Europe. Germany and Israel formed diplomatic ties in 1965. Germany is Israel's second biggest trading partner, after the U.S.
The session marks the first time cabinets from both countries have met for joint consultations, and the first time the German government has held a joint cabinet session with a country from outside Europe.
Foreign Minister Tzipi Livni was also to hold a separate meeting with her German counterpart Frank-Walter Steinmeier in talks expected to focus mainly on the Iranian nuclear threat. Defense Minister Ehud Barak was also scheduled to meet with his German counterpart, Franz Josef Jung.
Merkel, Olmert united in concern over Iran
During their press conference, Olmert and Merkel said their countries were Germany are united in their concern over Iran's nuclear ambitions and both support the need to stop its enrichment of uranium.
"We regard with grave concern, in a very similar way, the continuation of Iran's steps to develop nuclear armament," Olmert said, adding: "We are also joined in our acknowledgement that there is a need to continue to conduct a series of steps that will bring this development process to a halt."
Speaking after Olmert, Merkel said "the threats that [Israel] is seeing - we also consider them threats against us."
"We agree that we must do all we can to put as much pressure as possible on Iran, through Security Council measures and also through talks within the European Union," she added.
"Germany is counting on a diplomatic solution. We're counting on a solution in which as many [countries] as possible are included," she said. "Iran must show that it is not working on a nuclear program."
Meanwhile, Israel Defense Forces Chief of Staff Gabi Ashkenazi met on Monday with his German counterpart, General Wolfgang Schneiderhan, who accompanied Merkel on her visit.
Schneiderhan was to receive security and strategic briefings from various military officials during his visit.
