Palestinian president returns triumphantly from UN

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Palestinian President Mahmoud Abbas waves to the crowd during celebrations for their successful bid to win U.N. statehood recognition in the West Bank city of Ramallah, Sunday, Dec. 2, 2012. Abbas returned home to a hero's welcome after winning a resounding endorsement for Palestinian independence at the United Nations. Israel on Sunday roundly rejected the United Nations' endorsement of an independent state of Palestine, announcing it would withhold more than $100 million collected for the Palestinian government to pay debts to Israeli companies. (AP Photo/Nasser Shiyoukhi)
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The Israeli lobbying efforts failed miserably. Just eight other countries voted with Israel, and even its closest allies in Europe, including Germany, Italy, France and Britain, either abstained or voted with the Palestinians.

Israel responded strongly and swiftly. The following day, it said it would start drawing up plans to build thousands of settlement homes, including the first-ever development on a crucial corridor east of Jerusalem.

Although the project is likely years away, if it happens at all, the announcement struck a defiant tone.

Building in the area, known as E1, would sever the link between the West Bank and east Jerusalem, the sector of the holy city the Palestinians claim for a future capital, and cut off the northern part of the West Bank form its southern flank. The Palestinians claim such a scenario would essentially kill any hope for the creation of a viable state.

The U.S., Britain, France and other European states all denounced the plan.

On Sunday, the European Union's foreign policy chief, Catherine Ashton, expressed concern that such settlement expansion "may represent a strategic step undermining the prospects of a contiguous and viable Palestine with Jerusalem as the share capital of both it and Israel. She urged Israel to show its commitment to the early renewal of peace talks but not going ahead with the settlement plan.

"The European Union has repeatedly stated that all settlement construction is illegal under international law and constitutes an obstacle to peace," Ashton said in a statement.

On Sunday, the Israeli government delivered another blow, saying it would withhold more than $100 million in funds it transfers to the Palestinians each month.

Instead, it said the money — taxes and customs duties that Israel collects on behalf of the Palestinians — would be used to pay off its debts to Israeli companies, including $200 million owed to the state-run Israel Electric Corp., government officials said.

The monthly transfers are crucial for the cash-strapped Palestinian Authority to pay salaries to its tens of thousands of civil servants and security forces. Israel has taken similar measures in the past before eventually releasing the money.

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