JERUSALEM - Israel has ended its unofficial building freeze in east Jerusalem, giving the green light for hundreds of new homes in Jewish neighborhoods of the traditionally Arab sector of the city - and dealing another potential blow to U.S.-led efforts to salvage peace negotiations.
The Palestinians, who have threatened to quit the just-restarted U.S.-brokered peace talks without a complete freeze on West Bank construction, on Friday condemned the decision as a move that casts doubt on the Israeli government's interest in peace.
U.S. mediators have been scrambling for weeks to keep the talks alive and the Arab League last week gave the sides an additional month to find a way out of the impasse.
It's unclear whether the latest Israeli move - announced late Thursday in an uncharacteristically low-key statement - could be a payoff from Prime Minister Benjamin Netanyahu to hawkish coalition partners for possible compliance with demands from around the world that Israel resume a curb on West Bank settlements.
That so-called "moratorium" expired last month, on schedule but with unfortunate timing - about three weeks after the Obama administration finally coaxed the two sides back into direct talks aimed at ending a century's conflict.
Palestinian negotiator Nabil Shaath said after learning of the approval of new east Jerusalem construction that "the Israelis are going on a rampage" and accused them of "creating one crisis after another."
"This announcement is a very clear-cut indication that the choice of Mr. Netanyahu is settlements, not peace," said Palestinian chief negotiator Saeb Erekat.
Netanyahu's office refused to comment, and there was no immediate comment from U.S. officials.
Israel's Housing Ministry signed off on the construction of 238 new homes in the east Jerusalem neighborhoods of Ramot and Pisgat Zeev as part of a larger announcement allowing developers to bid on thousands of housings contracts across Israel.