Netanyahu intervenes in sensitive Jerusalem project

JERUSALEM (Reuters) - Prime Minister Benjamin Netanyahu, citing concern over Israel's international image, persuaded Jerusalem's mayor on Tuesday to put on hold any demolition of Palestinian homes in a municipal tourism project.

Palestinian Prime Minister Salam Fayyad condemned the project as another attempt by Israel to cement its claim to all of Jerusalem, and urged the international community to stop Israel from carrying it out.

The United States praised Netanyahu's move, saying the two sides appeared to be closer to resuming peace negotiations that have been frozen for more than a year and it did not want either to do anything to derail their possible resumption.

Israel captured East Jerusalem in a 1967 war and considers the entire city its indivisible and eternal capital, a claim that has not won international recognition.

Palestinians want East Jerusalem to be the capital of a state they hope to establish in the West Bank and Gaza Strip.

Mayor Nir Barkat has unveiled a plan that would involve demolishing about 20 Palestinian homes built without permits in the East Jerusalem neighborhood of Silwan, and reshaping parts of it into parkland and tourism-based business areas.

In return, Palestinian residents would receive permission to build elsewhere in Silwan, which is adjacent to Jerusalem's walled Old City.

A statement issued by the prime minister's office said Netanyahu told Barkat he was concerned "parties interested in sowing discord" would present to the world a "distorted picture" of the "King's Garden" plan.

A city spokesman said Netanyahu asked Barkat to set aside more time to "come to an understanding" with the Palestinian inhabitants on the plan which aims to revive a biblical garden dating to the days of King Solomon so to promote tourism.

"Of course I accepted the prime minister's request and I decided to delay the discussion of the local commission in planning (King's Garden), and continue the discussion with the residents," Barkat told a news conference.

PALESTINIAN ANGER

The plan has stoked Palestinian anger and any demolitions would be certain to raise international concern.

"These escalatory actions add a high degree of danger to a situation that was already dangerous," Fayyad said in the West Bank town of Ramallah, denouncing Israel for "strengthening its grip" on East Jerusalem.

The United States, and other Western countries have called on Israel to cease the demolition of Palestinian homes built without municipal permits in East Jerusalem.

Palestinians say it is nearly impossible to obtain permission to build from Israeli authorities.

Citing biblical and historical links to Jerusalem, Netanyahu has excluded the city from a limited freeze on Jewish settlement construction he ordered in November after U.S. pressure to help revive stalled peace talks.

State Department spokesman P.J. Crowley said Washington appreciated Netanyahu's intervention. "That said, we continue to urge the parties to refrain from unilateral actions that, whether intended to or not, undermine trust," he said.

He also said Secretary of State Hillary Clinton would attend a planned March 19 meeting of the Quartet of Middle East peace mediators -- the European Union, United Nations, United States and Russia -- if her counterparts could make it.

"We think we are at a point in time where there is ... some reason to believe that the parties are getting closer" to resuming peace talks, he told reporters in Washington. "We hope to see the parties engage in discussions ... soon."

Tensions have risen in Jerusalem over the past week since Netanyahu announced he intended to include two holy sites, revered by Jews and Muslims, in the West Bank in a separate Jewish heritage plan.

Monday, an Israeli security guard was wounded by gunfire in Silwan. A day earlier, Israeli police clashed with dozens of rock-throwing Palestinians outside al-Aqsa mosque in the Old City.

(Additional reporting by Ali Sawafta in Ramallah and Arshad Mohammed in Washington)

(Writing by Jeffrey Heller and Allyn Fisher-Ilan; Editing by Noah Barkin and Cynthia Osterman)