Robert Berger | Jerusalem 09 January 2011
A worker walks past excavators during the demolition of the Shepherd Hotel in the Sheikh Jarrah neighbourhood of East Jerusalem, 09 Jan 2011.
A new Israeli settlement project in Jerusalem is casting a shadow over international efforts to revive the peace process. Israel annexed East Jerusalem after capturing it in the 1967 Six-Day War in a move never recognized internationally.
Israeli bulldozers demolished a hotel in a predominately Arab neighborhood of East Jerusalem to make way for new Jewish homes. The Shepherd Hotel, which was purchased by a Jewish-American billionaire in 1985, will be replaced by 20 luxury apartments for Israelis.
Israel says it is a private project and the property was purchased legally. But Palestinians claim East Jerusalem as the capital of a future state, and they say Israeli building there is illegal under international law.