US Secretary of State Condoleezza Rice said on Sunday that Israeli settlements in the occupied Palestinian territories must not block any final Middle East peace agreement. “No party should be taking steps at this point that could prejudice the outcome of the negotiations,” Rice told reporters after meeting with Palestinian President Mahmoud Abbas in the West Bank town of Ramallah. The “US will not consider these activities to affect any final-status negotiations including final borders,” she said, referring to the expansion of Israeli settlements in the occupied West Bank and east Jerusalem. Rice earlier criticized Israel's announcement of a massive new housing project in east Jerusalem ahead of her visit, which is aimed at adding momentum to peace efforts. Disputes over settlements and a corruption scandal that could topple Israeli Prime Minister Ehud Olmert have undercut US efforts to reach a deal before President George W. Bush steps down in January, Israeli, Palestinian and Western officials say. Israel said on Saturday it planned to build 1,300 new homes in the occupied West Bank in an area it considers part of Jerusalem. Palestinian negotiator Saeb Erekat called the move part of “a systematic policy to destroy” the peace process. Israel insists its settlement projects are consistent with longstanding policies that do not contradict the peace efforts. Palestinians fear the enclaves will deny them a viable and contiguous state. “It's clear to everyone that the Jewish neighborhoods of Jerusalem will remain part of Israel in any possible final status agreement,” Olmert spokesman Mark Regev said. “Building inside those Jewish neighborhoods in no way contradicts our commitment to move forward in the peace process,” Regev said. Israel considers all of Jerusalem – including the eastern part of the city it captured in a 1967 war and annexed in a move that did not gain international recognition – to be its “eternal and indivisible” capital. Palestinians want East Jerusalem to be the capital of the state they aim to establish in the West Bank and Gaza Strip. Israel has repeatedly announced plans to build more homes in Jewish settlements it intends to keep in any peace deal, violating its commitments to halt all settlement activity under a 2003 US-backed “road map” peace plan. The road map, reaffirmed by Israeli and Palestinian leaders at a peace conference hosted by Bush in November that launched the latest negotiations, also calls on the Palestinians to crack down on militants. In the Gaza Strip, the Hamas group that controls the territory said “nothing good could come from Rice's visit”.
