Rina Castelnuovo for The New York Times
A point in East Jerusalem overlooking a region to the left called E1, where Israel plans to build.
JERUSALEM — High up in an empty, mountainous expanse east of this city there is a stone patio with a pair of green metal benches and a plaque marking the cornerstone of a future Jewish community. Dedicated in 2009, the plaque promises the new city will be built “adjacent to the united Jerusalem, which will be quickly re-established.”
Jerusalem, which both Israel and the Palestinians see as their capital, is anything but united, with fierce fights over its development posing perhaps the greatest threat to the prospects of peace. And beyond the cornerstone, nothing has been erected since in this contentious 4.6-square-mile area, known as E1, where there are many more goats than people.
But Israel’s announcement on Friday that it was moving ahead with zoning and planning preparations for the area could change all that, and many fear that it could close the window on the chance for a two-state solution to the long-running Israeli-Palestinian conflict.
Construction in E1, in fWest Bank territory that Israel captured in the 1967 war, would connect the large Jewish settlement of Maale Adumim to Jerusalem, dividing the West Bank in two. The Palestinian cities of Ramallah and Bethlehem would be cut off from the capital, making the contiguous Palestinian state endorsed by the United Nations last week virtually impossible.
Although Israeli officials did not call the move retaliation for the United Nations vote, most people here assumed the timing was not coincidental.
“It’s like two 3-year-old children playing, and one is hitting and the other is slapping instead of sitting down,” said Alex Lash, 56, an Israeli who was having a breakfast at a bustling restaurant here on Saturday morning in the Palestinian neighborhood of Beit Hanina after a three-hour mountain-bike ride. “It’s a never-ending story: we are doing something, they are doing something, one movement brings the other side’s movement. There is no end for that.”
Zakaria al-Qaq, a professor of national security at Al Quds University here and a resident of the East Jerusalem neighborhood of Silwan, also described the situation as a hopeless “cycle of action and reaction,” and said that Prime Minister Benjamin Netanyahu was under pressure to act because of the Israeli elections on Jan. 22.
“Maybe the Palestinians got something on paper and morally, but he got something on the ground,” Mr. al-Qaq said. “Netanyahu is trying to enforce something on the ground and gain the hearts and minds of the Israeli public. It’s a strong message to the Palestinian leadership that Netanyahu is not without cards in his hand.”
The development of E1, a project that the United States has blocked several times since 1994, has long been seen as a diplomatic third rail, and several experts said Saturday that they expected that Israel may once again back down from building there. But several other controversial housing projects within Jerusalem have sped forward in recent months, raising the ire of the Palestinian leadership, left-leaning Israelis and the international community, most of whom see the settlements as a violation of international law.
Along with zoning and planning for E1, Israel on Thursday approved 3,000 new housing units in unspecified parts of East Jerusalem and the West Bank.
Dani Seidemann, a Jerusalem lawyer and longtime antisettlement activist, said that even before the latest decision, the government had issued tenders for the construction of 2,366 units in 2012, more than twice the number built in the previous three years combined.
These include more than 1,200 units in Ramot and Pisgat Zeev — decades-old upscale Jewish neighborhoods of 40,000-plus residents that straddle Beit Hanina in the northern reaches of the municipality. Late last month, final approval of 2,610 units in an undeveloped southern stretch known as Givat Hamatos was postponed under international pressure because it was scheduled while Secretary of State Hillary Rodham Clinton was in the region trying to negotiate an end to Israel’s bloody conflict with the Gaza Strip.
“Now approaching the point of no return,” Mr. Seidemann said during a tour of the area Saturday. “It’s the largest settlement surge in Jerusalem since the 1970s.”
Israel began building and expanding East Jerusalem in 1968, shortly after it wrested control of the area from Jordan. There were about 69,000 Palestinians living there then. Now, nearly 300,000 Palestinians and more than 190,000 Jews live in dozens of separate communities scattered throughout the areas north, east and south of the Old City that are collectively called East Jerusalem. (Some 2,500 Jews have also settled house by house in close-in neighborhoods like Silwan and Sheikh Jarrah.)
