The New Nation - Internet Edition

AP, Jerusalem

A key ally of Prime Minister Ehud Olmert said Sunday that Israel will hold on to all Jewish neighborhoods of Jerusalem but would have to relinquish Arab neighborhoods in a peace agreement with the Palestinians.

The comments by Vice Premier Haim Ramon appeared aimed at defusing U.S. criticism of an Israeli plan to expand one of its Jewish neighborhoods in east Jerusalem, the section Palestinians claim as capital of a future state. Israeli-Palestinian peace negotiations are set to resume Wednesday under an agreement reached at last month's Mideast peace conference in Annapolis, Md. A senior Palestinian official charged Sunday that Israel is already negotiating in bad faith about Jerusalem, one of the touchiest issues on the table. "These statements place obstacles before any serious attempts by Palestinian negotiators on Jerusalem," Palestinian Foreign Minister Riad Malki said.