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The Jerusalem municipality has begun the process of approving a plan for a new housing complex, including a synagogue, in the heart of the Arab neighborhood of Silwan south of the Old City.

The plan, submitted by the right-wing Elad association, includes 10 apartments, kindergarten classrooms, a library and underground parking for 100 cars.

Documents show the land the complex is to be built on belongs to the Israel Lands Administration (ILA); however, the ILA said it was unaware of the plan.

The municipal spokesman said Elad had leased the land, and therefore the plan does not require ILA approval. A municipal document dated January 21, 2008 notes that all necessary recommendations had been received in the planning file.

The area slated for the new project is located 200 meters from the Old City walls, in an area considered one of the most sensitive in the present negotiations with the Palestinians over the final-status agreement.

In a letter yesterday to Attorney General Menachem Mazuz, attorney Daniel Seideman, representing the Ir Amim association and a city council member, Pepe Alalo (Meretz), asked whether Mazuz thought it proper that a synagogue be established in the heart of an Arab neighborhood.

The Ir Amim association addresses issues impacting Israeli-Palestinian relations in Jerusalem.

Seideman reminded Mazuz of repeated pledges by the State Prosecutor's Office to the High Court of Justice to ensure there were no recurrences of the government allowing right-wing associations to take over public lands in Silwan and the Old City. He attached the photocopy of a 1991 deed of sale by the Jewish National Fund of the lands of Silwan to the ILA. The ILA then transfered the land to Elad in a process that was not made public.

"In the heart of Jerusalem, for all intents and purposes, an independent Elad kingdom has been created, in which hegemony, above and below the ground, has been given to a body with a clear ideological bent," Seideman wrote Mazuz.

He also said the "kingdom" was being established through actions designed to push out thousands of Arab residents from the area.

Seideman demanded that Mazuz instruct the ILA to withdraw the plan and the city to shelve it, and to investigate how the decision was made that led to the proposal for the construction project.

A 1992 government investigation headed by then Justice Ministry director general Haim Klugman found that associations managing properties in East Jerusalem, including Elad, had took them over by continuously submitting false affidavits, misusing the law governing absentee property and illegally transfering tens of millions of shekels public money to the associations, among other allegations.

In November, Haaretz reported that the registrar of non-profit associations was considering demanding that Elad be disbanded as a non-profit association, after it refused to report the sources of contributions of more than $7 million that it had received in 2005.

The Justice Ministry said in response that Elad had given the registrar the names of its donors, but asked that the names remain confidential in its financial report, as the law allows. The request was granted, and there is no intention of disbanding the association, the Justice Ministry added.