Israel accelerated its "illegal annexation" of East Jerusalem last year through municipal and security policies that discriminate against Palestinian residents, according to an internal report by European Union diplomats, dated Dec. 15, 2008, which was obtained by Reuters. The 20-page report acknowledged Israel's security needs but said its "actions in and around Jerusalem constitute one of the most acute challenges to Israeli-Palestinian peace-making."

The number of building tenders issued by Israel for Jewish homes in East Jerusalem increased by a factor of 40 in 2008 over 2007, the report found, while Israeli authorities placed "severe restrictions" on construction permits for Palestinians, who were also denied municipal funding proportionate to their population.

The report also criticized Israel for constructing a barrier that runs through Jerusalem, saying it cut off thousands of Palestinians from the occupied West Bank. Israel says the Jerusalem section of the West Bank wall will be completed by 2010.

The revelation comes as Israel announced new plans to demolish scores of Palestinian homes in East Jerusalem. The Jerusalem city government said last month it plans to demolish 88 Palestinian homes that were built without permits in Silwan district, near the walls of Jerusalem's Old City, to create a public garden. US Secretary of State Hillary Clinton, who visited the region this week, called the planned demolitions "unhelpful." Israeli officials deny there is a campaign to drive out Palestinians, who make up 34% of Jerusalem's population. (Reuters, March 7)

In a first for an Israeli politician, outgoing Prime Minister Ehud Olmert called in remarks broadcast March 7 for dividing Jerusalem. "Let us be under no illusion, there will never be peace with the Arabs and the Palestinians if part of Jerusalem does not ultimately become the capital of a Palestinian state," he said in remarks carried on public radio. Olmert said Israel would have to make "courageous but painful" decisions if it hoped to reach a peace deal with the Palestinians, including an "almost total withdrawal" from the West Bank. (AFP, March 7; YNet, March 6)

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