EU says Jerusalem should be joint capital 

European Union foreign ministers urged Israel and the Palestinians on Tuesday to make Jerusalem their shared capital, prompting a swift, angry reaction from Israel.

For their part Tuesday, the Palestinians announced a boycott of products made in Israeli settlements in the West Bank. Palestinian Economics Minister Hassan Abu Libdeh said the government has already confiscated $1 million worth of products, including foods, cosmetics and hardware, and that he hoped to remove all such goods from Palestinian store shelves next year.

In Brussels, EU foreign ministers reiterated that the 27-member bloc would not recognize Israel's annexation of the eastern part of Jerusalem after it occupied it in the 1967 war. The ministers called for Israel to share Jerusalem as a capital with a future Palestinian state.

Although the EU has long opposed the annexation of east Jerusalem, the statement angered Israel and was sure to deepen Israel's sense that the Europeans favor Palestinian positions. President Barack Obama has been trying, so far in vain, to nudge the sides toward renewed peace talks.

"The EU will not recognize any changes to the pre-1967 borders including with regard to Jerusalem, other than those agreed by the parties," said the ministerial statement. It was referring to the Mideast war in which Israeli forces captured east Jerusalem from the Jordanian army.

"If there is to be a genuine peace, a way must be found (through negotiations) to resolve the status of Jerusalem as the future capital of two states," it said.

The EU ministerial statement dropped an earlier Swedish draft resolution which explicitly stated that east Jerusalem — the disputed part of the holy city — should be the capital of a Palestinian state after Israel warned it would damage the bloc's ability to take part in any resumed peace talks as a negotiator.

The Israeli Foreign Ministry reacted immediately. "We regret that the European Union chose to adopt the text," Israeli Foreign Ministry spokesman Yigal Palmor said in a statement. He said the statement "does not contribute" to promoting peace and ignores the Palestinians' refusal to resume talks.

Palestinian President Mahmoud Abbas refuses to resume peace talks, which broke down a year ago, unless Israel halts all settlement construction.

The Palestinian prime minister, Salam Fayyad, welcomed Tuesday's EU statement. He said it gives Palestinians "a better sense of hope and possibility about tomorrow."

The competing claims to east Jerusalem remain perhaps the most explosive issue in the Israeli-Palestinian conflict.

East Jerusalem is home to sensitive Jewish, Muslim and Christian holy sites. The most contentious is the disputed hilltop compound known to Jews as the Temple Mount and to Muslims as the Noble Sanctuary. Temple Mount, home to the biblical Jewish Temples, is the holiest site in Judaism. It also is the site of the Al Aqsa Mosque, the third-holiest site in Islam.

Palestinians have complained that Israel is trying to restrict their numbers in the eastern part of the city.

Some EU ministers supported the original Swedish proposal but others said it would risk undermining efforts to restart peace talks. Swedish Foreign Minister Carl Bildt said after the meeting: "We call on the Israeli government to cease all discriminatory treatment of the Palestinians in east Jerusalem."

The ministers took "positive note" of Israel's recent decision to implement a temporary freeze on building new homes in West Bank settlements — a decision that angered the Palestinians by excluding east Jerusalem.

But they emphasized that the settlements and a separation barrier Israel has built are on occupied land and that Israel's evictions and the demolition of Palestinian homes in east Jerusalem were illegal under international law.

The resolution said such Israeli actions "constitute an obstacle to peace and threaten to make a two-state solution impossible."

The Palestinians have dismissed the Israeli's temporary building freeze as insincere because it excludes east Jerusalem and 3,000 homes already being built in the West Bank. Some 300,000 Israelis live in the West Bank, in addition to 180,000 Jewish Israelis in east Jerusalem.

Meanwhile Tuesday, the Palestinians' economics minister, Abu Libdeh, defended the Western-backed government's decision to remove settlement-built products from Palestinian stores. "Consuming settlements' products is wrong, nationally, economically, politically, and must stop right away," he told a news conference.

Fully implementing the boycott will be a challenge since the Palestinian economy relies heavily on Israeli manufacturers for many basic goods.

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