By Joseph Nasr JERUSALEM, Dec 4 (Reuters) - Palestinian leaders accused Israel on Tuesday of trying to wreck the peace process launched last week by U.S. President George W. Bush after Israel revealed a plan to build new homes on land around Jerusalem. "This is an attempt to obstruct negotiations," the chief Palestinian negotiator Ahmed Qurei told Reuters after Israel's Housing Ministry said the government had invited construction firms to bid for contracts to build dozens of houses and shops. He urged the United States to intervene to stop the move. It is the first major public dispute between Israel and the Palestinians since Bush, who has invested much personal capital in seeking peace before he steps down in a year, presided over handshakes at a meeting in Annapolis last week. A spokesman for Israeli Prime Minister Ehud Olmert, who met Bush and Palestinian President Mahmoud Abbas near Washington, insisted the move did not breach Olmert's undertaking at the conference to honour commitments under the 2003 'road map'. These include halting Jewish settlement on Arab land. The spokesman said Israel did not consider the site, known as Har Homa by Israel and Abu Ghneim by Palestinians, as part of the West Bank territory which the Palestinians want for a state. "This a flagrant violation of all that happened at Annapolis," Qurei, a former prime minister, said. "We demand from Israel to reverse this decision ... There will be no peace process if they continue with settlement activities." "We urge the U.S. administration, which is the judge, to voice their position. This contravenes everything, starting with the road map and all other signed agreements," he added. A spokeswoman for the Housing Ministry confirmed the Israel Land Authority, a government agency, had issued a tender for the construction of some 300 units at Har Homa. The tender, posted on the Authority's Web site and dated Dec. 2, invited firms to bid to build 307 "residential and/or commercial and/or hotels and/or leisure" units. The Housing Ministry spokeswoman said the tender was part of a plan dating back some 20 years. The site lies south of central Jerusalem, close to Bethlehem. It is one of several residential districts that have been built on land captured by Israel in the 1967 war and now home to a substantial Jewish community. LAND DISPUTE Israel annexed East Jerusalem and extended the city limits to include a number of West Bank districts beyond the municipal boundary that had existed before 1967. The land where Har Homa was built was not part of the city before Israel took it. Israel's annexation and the redrawing of boundaries around Jerusalem, revered by Jews, Muslims and Christians, has not been recognised internationally. Abbas said at Annapolis he wanted East Jerusalem as capital of a state he hopes can be established by a peace treaty before Bush steps down in January 2009. Asked whether the new housing plan was a rebuff to Abbas's plans, Olmert's spokesman Mark Regev said: "Not at all". "Israel makes a clear distinction between the West Bank and East Jerusalem, which falls under Israeli sovereignty," he said. But Nimer Hammad, an aide to Abbas, said: "Israel is insisting on pursuing its policies that will lead to the obstruction of the peace process". "It will undermine the credibility of the United States as a sponsor of the peace process and the effort of the Annapolis conference and efforts by the international community." There was no immediate response from U.S. officials. Bush hailed the success of the Annapolis meeting in seeing Abbas and Olmert agree to launch full peace negotiations after a seven-year stalemate. But few observers believe a peace deal can be clinched by the end-2008 target date embraced at the meeting. Negotiators plan to meet in Jerusalem on Dec. 12. Core issues in dispute are the status of millions of Palestinian refugees, security, the borders of the new state and the fate of Jerusalem, which Israel wants, undivided, as its capital. Addressing a sceptical domestic audience, Olmert, who is unpopular with voters, has this week played down the importance of any deadline for ending talks and has stressed that Israel wants Abbas to make good on his road map commitments to curbing violence by Palestinian militants before it signs any treaty. (Additional reporting by Mohammed Assadi and Wafa Amr in Ramallah and Ori Lewis and Alastair Macdonald in Jerusalem; Writing by Alastair Macdonald; Editing by Catherine Evans)
