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Jerusalem's municipal government upped the political ante this week with the announcement it was issuing warnings to several Palestinian families in the Arab district of Silwan, a poor hillside community just below the historic Old City, that their makeshift homes would be demolished.

They and some 60 other Palestinian families constructed their homes on land the Israeli municipality deems parkland.

Coming on the heels of Monday's announcement that 1,300 more housing units are to be constructed in Har Homa and another eastern Jerusalem Jewish neighbourhood, and an announcement made Tuesday morning that 800 more homes are to be built in the northern West Bank settlement of Ariel, it appears to be a major political offensive by Israeli Prime Minister Benjamin Netanyahu that flies in the face of what the United States and Palestinian Authority have called for in attempts to resume the peace process.

"This kind of activity is never helpful when it comes to peace negotiations," said U.S. President Barack Obama while on a visit to Indonesia Tuesday. He was referring to the Israeli announcement of new construction in territory seen as occupied by every government in the world except Israel.

"It's catastrophic," said Gershon Baskin, co-director of the Israel-Palestine Center for Research and Information. "This will ensure there is no peace process."

Mr. Netanyahu is playing hardball, Mr. Baskin says. "This is the second time he has stuck it in the Americans' eye." (The first was in March during U.S. Vice-President Joe Biden's visit to Israel, when plans for 1,600 new Jewish homes in another East Jerusalem neighbourhood were announced. At that time, Mr. Netanyahu pleaded innocence.)

"This time, Netanyahu's fingerprints are all over it," Mr. Baskin said. "He probably feels emboldened by the results of last week's elections in the States." In the midterm elections, Mr. Obama's Democratic Party lost its majority in the House of Representatives, a decline in support that will make it more difficult for Mr. Obama to strongarm Israel.

"Netanyahu's got a lot of friends in Congress," Mr. Baskin said. "There are some who say he and his friends want to make sure Obama is a one-term president. This will certainly help - embarrassing the President; showing how weak he is."

Chief Palestinian negotiator Saeb Erakat said Tuesday: "Israel's latest announcement … necessitates dramatic international action for immediate recognition of the Palestinian state on the June 4, 1967, borders."

"Israel's settlement enterprise," Mr. Erakat said, "is nothing but a premeditated process to kill the possibility of an independent Palestinian state."

Two weeks ago, Mr. Erakat said Israel had to decide between peace and settlements. "I guess this is Israel's answer," Mr. Baskin said.

Israeli settlement leaders remained defiant in the face of U.S. criticism. "This again proves that the U.S. President is out of touch with the reality of the facts on the ground," said Danny Dayan, chairman of the Council of Jewish Communities in Judea and Samaria.

"The people of Israel have every right, both legal and moral, to build for the needs of our families and the future of our nation in our undivided capital," Mr. Dayan said.

Of all the announcements this week, the one that may prove the most incendiary is that of the Silwan demolitions. Building new Jewish homes is bad enough, Palestinians say. But tearing down Palestinian homes is that much worse.

The people of Silwan already feel under assault from the Jewish organization Elad that has been buying up properties in the neighbourhood and placing Jewish families in them. This week, it was revealed that many of the properties were sold to the organization by the Israeli government without the normally requisite tenders.

The Jerusalem municipal plan calls for razing 22 Palestinian homes in Silwan, which were built without permits, and constructing a tourism centre in their place. The centre, called Al Bustan in Arabic and Gan Hamelekh (King's Garden ) in Hebrew, is to include restaurants and boutique hotels.

The city said it will help the residents of the 22 homes slated for demolition move to other areas of Silwan.

Danny Seideman, a Jerusalem lawyer knowledgeable in these matters, noted that a number of those 22 families were considering the offer to relocate. Several of them, however, balked at the idea. "These are the ones being warned," Mr. Seideman said.

Palestinian observers say there is likely to be widespread riots when Israeli authorities bring in bulldozers to demolish those homes.

"Silwan is a powder keg," Mr. Seideman said, "and [Jerusalem]Mayor [Nir]Barkat is playing with fire."

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