Israeli Vice Premier Haim Ramon stated that Israel intends to maintain control of Jewish neighborhoods of East Jerusalem and would hand over Arab neighborhoods in a peace agreement with the Palestinians.

Peace negotiations are set to continue under a previous agreement between the Israeli and Palestinian governments. Previous talks collapsed when Israeli forces and Palestinian militants clashed, marking the beginning of the second Palestinian uprising.

Roughly 500,000 Jews and 230,000 Arabs live inside the expanded boundaries of Jerusalem created in 1967 after Israel’s capture of the eastern part of the city. Since then, Israel has built a string of Jewish neighborhoods around the capital.

Israel recently published advertisements seeking bids to build 307 additional housing units in Har Homa, its newest neighborhood. Arab League chief Amr Moussa stated the construction plan is a “flagrant violation of the Annapolis summit and international law that considers the West Bank, including East Jerusalem, as occupied land.”

Vice Premier Ramon, speaking for Prime Minister Ehud Olmert, said Har Homa, along with other older neighborhoods, will remain Israeli. About 180,000 Israeli settlers live in these neighborhoods.

East Jerusalem is a touchy subject for both the Israeli and Palestinian governments. Israel considers the entire city its capital, while the Palestinians insist that East Jerusalem is part of the West Bank and claim it as the capital of a future Palestinian state.