Jerusalem - A windswept hill in occupied East Jerusalem, home to a few dozen people in dilapidated trailers, has become one of the more unlikely points of conflict in this city, the site of a controversial plan that could make it impossible to ever divide the city.

Last week a municipal committee approved a plan to build 2,600 new homes in Givat Hamatos.

It is one of the largest expansions of an illegal East Jerusalem settlement in years, and it drew a sharp rebuke from the US, because it came just ahead of a high-level US-Israeli meeting at the White House.

Activists often compare this project to E-1, a planned settlement between Jerusalem and Maale Adumim in the occupied West Bank that would cut the direct route between Ramallah and Bethlehem.

The plan here would have a similarly drastic impact on the already balkanised geography of the West Bank.

"It's a huge problem for any future agreement that divides the city," said Hagit Ofran, the director of the settlement project at Peace Now. "It blocks the way for any capital the Palestinians might hope to have in East Jerusalem."

Nir Barkat, the mayor of Jerusalem, said the project would allow "thousands" of new residents to move to the city.

Supporters downplay the political implications, arguing that East Jerusalem already has large Jewish settlements.

"I don't think this is the problem," said Oni Avital, a real-estate broker involved with the project. "We already have thousands of people living here, in Gilo and other neighbourhoods. This is not the issue for peace."

But there is a problem, which lies in a valley beneath Givat Hamatos, where some 6,000 Palestinians live in the neighbourhoods of Beit Safafa and Sharfat.

To their west and south are several other Jewish settlements; to the north, the Green Line, which delineates Israel's pre-1967 borders.

A large settlement in Givat Hamatos would close off the eastern approach, so those two communities could not realistically become part of a future Palestinian state, except as an exclave.

"The village will become a ghetto," said Samir Zohar, a resident of Beit Safafa. "Every road will become a border. We'll have to sit at checkpoints to go to work."

'Airplane Hill'

Givat Hamatos means Airplane Hill, named in honour of an Israeli pilot who crashed here during the 1967 war.

It was settled in the 1990s to house about 600 families, part of a large wave of Russian and Ethiopian Jewish immigrants.

The Israeli government was struggling to house them all, and an empty hill seemed a convenient location to drop hundreds of prefabricated homes.

"Since one part of the area was an archaeological site and the other had a minefield from a previous war, it was not ruled out for a caravan site. None could complain that it would cause a drop in their property value," wrote Ira Sharansky, a professor at Hebrew University, in a book on politics and municipal planning in Jerusalem.

In its heyday, Givat Hamatos was a proper neighbourhood, with schools and municipal services.

All of the immigrants have since decamped for more permanent housing, though, and today only a handful of poor Israeli families live here.

They pay modest fees and utility bills to live in the ageing caravans.

A forlorn playground and a rusting synagogue are all that remain of the infrastructure. One woman spent a half-hour waiting for one of the scattered buses that still service the community.

"Maybe the residents here aren't the people you should be asking [about the plan]," said Hadar Hasid, a resident of one of the trailers. "Nobody consulted us. We can’t afford to continue living here if they build proper homes."

The construction has been in the works for years: the planning committee signed off in 2012, but did not grant final approval until last week.

It joins a growing list of major settlement expansions coinciding with high-profile US-Israeli meetings.

The planning committee approved 1,600 new homes in Ramat Shlomo in 2010, just as Vice President Joe Biden arrived in Israel.

The following year it approved 1,000 units in Gilo while former Israeli President Shimon Peres was visiting Washington.

'State land'

Daniel Seidemann, an Israeli lawyer and expert on Jerusalem, said the move "could not have taken place" without Netanyahu's permission.

The US condemned the move, with State Department spokeswoman Jen Psaki warning it would "distance Israel from even its closest allies".

All of the Israeli settlements in the West Bank and East Jerusalem are illegal under international law.

Her criticism drew rare direct criticism from Benjamin Netanyahu, Israeli prime minister. He told the US to "get the facts right" in several television interviews on Thursday.

"This isn't a settlement. These are neighbourhoods in Jerusalem," he said.



It's not clear when construction will actually begin. Major developers are already eyeing the site, including Rami Levy, a Jerusalem business magnate who owns a major supermarket chain and telecommunications firm, who is trying to buy up some of the land.

Avital, the broker, insisted that the planned community would not house only Jews. He produced documents from the municipality showing that Palestinians own some of the land: they will be allocated permits to build hundreds of homes, he said, an expansion of Beit Safafa.

Most of the land is owned by the state, though, according to both the municipality documents and Peace Now; if history is any guide, it will be marketed to Jewish families.

The decision had been rumoured in Jerusalem for weeks; activists said the government wanted to approve the construction after the Gaza war, as a sop to the right wing.

If the international backlash is strong enough, it could still conceivably use the "state land" designation to put a halt to construction.

"Most of this is state land, so the government could decide not to build there," Ofran said. "But they've cleared the last legal hurdle."