According to international law and the many resolutions of both the United Nations General Assembly and the Security Council, East Jerusalem is part of territories under an illegal and belligerent Israeli military occupation. Consequently, the Israeli policy of settling Israelis in East Jerusalem is as illegal as it is in the rest of the occupied territories, the West Bank, the Golan Heights and the Gaza Strip.

The United States, which at times has toned down its objection to Israeli settlements in East Jerusalem, has recently come out very clearly stipulating that the expansion of settlements in East Jerusalem is as illegal there as it is in the rest of the West Bank. That is also the position of almost every single country in the world, including the best friends of Israel outside the US, the EU member states.

Partly, the international community was alerted by Israel's policy in recent years of targeting areas of East Jerusalem not previously settled by Israelis. This includes the Sheikh Jarrah neighborhood, in the heart of Palestinian East Jerusalem and outside the walls of the Old City, which sparked the protest by the US State Department.

The reason there seems to be worldwide consensus to condemn Israel's expansion of settlements in East Jerusalem is that it is obvious not only to Palestinians but to all concerned parties that without East Jerusalem as its capital, the practical as well as political possibility of establishing a Palestinian state disappears.

In addition, Israel has expanded its geographic definition of Jerusalem to include a wide swath of West Bank territory, either to the east, toward Jericho, or to the south and north, toward Bethlehem and Ramallah respectively. With such expansion of Jerusalem and its settlements, the West Bank is being divided into two parts between which movement is gradually becoming more and more difficult. Moreover, the available area for a Palestinian state is being gradually diminished.

It is also worth mentioning that such development has very significant negative economic consequences. Most economic analyses of a two-state solution indicate that tourism will be one of the major economic pillars of the economy of a future Palestinian state. But East Jerusalem is absolutely crucial to that.

Another major source of concern arising from the Israeli settlement of East Jerusalem is for the future of Arab-Israel peacemaking generally. Arabs and Muslims, as well as Christians, attach enormous religious significance to the city. But Israel's practices in Jerusalem are changing its Arab Islamic and Christian character as well as its demography, forcing Muslims and Christians to leave. All this will reflect negatively on future Arab-Israel relations.

Israeli policy on Jerusalem is consistent with the current Israeli government's reluctance to seriously entertain a two-state solution as the way to end the Palestinian-Israeli conflict. Certainly, this Israeli government does not want to see an independent Palestinian state in the West Bank, including East Jerusalem, and the Gaza Strip.

As a result, Israel's settlement policy in general, and in East Jerusalem in particular, is seriously endangering the two-state solution that the international community is supposedly still committed to. And with the two-state solution go chances for peace in the region.- Published 27/7/2009 © bitterlemons.org

Ghassan Khatib is coeditor of the bitterlemons family of internet publications. He is vice-president for community outreach at Birzeit University and a former Palestinian Authority minister of planning.