Middle East peace talk in tatters over housing
Updated
A new spat over settlements may see Middle East peace talks called off (REUTERS: Baz Ratner)
Palestinian leaders are threatening to pull out of planned peace talks with Israel unless it reverses a plan to build 1,600 new homes for Jewish settlers in east Jerusalem.
Palestinian leaders had agreed to take part in indirect talks with Israel, with the US to act as a mediator.
But within days Israel announced plans to build more homes in east Jerusalem, which Palestinians claim is their rightful capital in a future state.
Palestinian president Mahmoud Abbas says he can no longer go through with the talks unless the project is cancelled.
United States vice-president Joe Biden, who has been in Israel this week, has condemned its leaders over the decision.
There are also signs the Israeli Labour Party may pull out of Benjamin Netanyahu's ruling coalition in protest.
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