TEL AVIV—U.S. Secretary of State Condoleezza Rice called Jewish settlement building "a problem" on Saturday and said Israel had not done enough to ease restrictions on Palestinians in the occupied West Bank.
"Look, it's a problem and I think it's a problem that we're going to address with the Israelis," Rice said of recent Israeli settlement construction announcements as she flew to Tel Aviv on her sixth trip this year to try to advance Israeli-Palestinian peace talks.
Bitter disputes over settlements and a corruption scandal that could force Israeli Prime Minister Ehud Olmert out of office have undercut U.S. efforts to reach a statehood agreement this year, Israeli, Palestinian and Western officials say.
Ahead of Rice's arrival, Israel said it had approved construction of 1,300 new homes in an area of the West Bank that the Israeli government considers part of Jerusalem.
Interior Ministry spokeswoman Sabine Hadad said the housing units, planned for the ultra-Orthodox area of Ramat Shlomo, were approved by the regional planning board as part of Jerusalem's housing master plan.
Palestinian negotiator Saeb Erekat called the announcement part of "a systematic policy to destroy the peace process", and urged Rice to make the issue her top priority.
"It'll certainly be a topic of conversation and I expect to raise it with all of Israel's officials and leaders," Rice told reporters of the newly-announced units. "We've said before that this is a time to try and build confidence and this is simply not helpful."
Ramat Shlomo is located on land captured by Israel during the 1967 Middle East war. Israel incorporated the area into the municipal borders of Jerusalem in an act not recognised internationally.
Restrictions
While saying Israel has taken some moves to ease restrictions for Palestinians in the West Bank, notably in the northern city of Jenin where Palestinian forces have taken on responsibility for security, she said more progress was necessary.
"It's not enough and there certainly and clearly needs to be more," Rice said. "I understand the security considerations as well as anybody, but the obligation was undertaken to improve the lives of Palestinians and we are going to have to work very hard if we are going to make that true in a broader sense."
Analysts believe that the corruption scandal dogging Olmert has dramatically reduced the chances of a peace deal before U.S. President George W. Bush leaves office in January and could force Rice to consider scaling back her ambitions.
During her visit, Rice plans to meet Olmert in Jerusalem and Palestinian President Mahmoud Abbas in the West Bank city of Ramallah. She will also hold three-way talks with the lead negotiators, Israeli Foreign Minister Tzipi Livni and former Palestinian prime minister Ahmed Qurie.
Despite Olmert's political difficulties, the administration has said it will continue to press for a peace agreement this year—the goal Bush announced at a high-profile peace conference he hosted in November in Annapolis, Maryland.
Western, Palestinian and Israel officials have all acknowledged privately, however, that Olmert's corruption investigation could trigger new elections, dimming—if not snuffing out—the chances of any deal.
Some analysts said Bush should now concentrate simply on handing over an active peace process to his successor, rather than on striving to produce some kind of a deal that may be impossible to reach given Israel's political uncertainty.
Olmert has rebuffed calls that he resign over allegations that he took envelopes stuffed with cash from a U.S. businessman. Olmert, who has said he would resign if indicted, and the New York-based businessman have denied any wrongdoing.
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