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Israel"s plans to build homes for Jewish...

Israel announced last week it would build 1,600 new housing units in East Jerusalem, shortly after the Palestinian authorities agreed to hold U.S.-mediated indirect peace talks with Israel after a 14-month break.

Addressing an Arab League meeting in Cairo on Monday, Catherine Ashton said that Israel"s decision "endangered and undermined the tentative agreement to begin proximity talks."

"The EU position on settlements is clear. Settlements are illegal, constitute an obstacle to peace and threaten to make a two-state solution impossible," Ashton said.

The Arab League has threatened to review its support for Israeli-Palestinian talks shortly after the Israeli government made the announcement on the new housing project, while the Palestinian Authority on Monday ruled out peace negotiations with Israel while it continues settlement activity in the occupied territories.

Settlement construction in the West Bank and East Jerusalem, both occupied by Israel since

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