RAMALLAH, 13 December 2007 — As Palestinian and Israeli negotiation teams yesterday formally kicked off the first round of final status talks aimed at reaching a permanent peace deal by the end of 2008, the head of an Israeli Army body said that there are “hundreds, even thousands, of planned housing units in the West Bank that have building permits and do not need any further government approval before construction can begin.”

Brig. Gen. Yoav Mordechai, the head of the Civil Administration, told the Israeli inter-ministerial committee on illegal outposts in the West Bank that such construction “could cause similar embarrassment to that created by the publication of the tender for building in Har Homa.”

The discussion, which was meant to center on planning and construction in the West Bank, quickly turned into a discussion of the Har Homa crisis, in which the recent tender for the construction of more than 300 apartments in this East Jerusalem settlement generated sharp criticism from US Secretary of State Condoleezza Rice and United Nations Secretary-General Ban Ki-moon. On Monday, the European Union also issued a presidential declaration condemning the construction plans.

Meanwhile, Palestinian and Israeli negotiators started talks on a permanent agreement in accordance with the understandings reached at the Annapolis summit. The meeting in Jerusalem’s King David Hotel was low-profile, as the originally scheduled photo-ops for the media was canceled due to a Palestinian protest against the latest Israeli military offensive in the Gaza Strip that left six Palestinians killed.

According to Palestinian and Israeli sources, the negotiation teams, headed by former Palestinian Prime Minister Ahmed Qorei and Israeli Foreign Minister Tzipi Livni, will present their suggestions on how the negotiations should be conducted. The sources said the Palestinians are seeking the establishment of separate negotiating teams for each of the core issues to be discussed: status of Jerusalem, borders of the Palestinian state and refugees. Israel is opposed to this format. The sources expected the negotiating teams to discuss next week’s donor conference in Paris for the Palestinian Authority, and also anticipate that the Palestinians will express their opinion on Har Homa construction.

In a related development, the Quartet’s Mideast envoy, Tony Blair, told the Israeli Knesset (Parliament) Foreign Affairs and Defense Committee that he understands Israel’s doubts regarding negotiations with the Palestinians, but urged the deputies present to proceed in talks.

Blair rejected calls for funding first the Palestinian Authority’s infrastructure and economy, saying that there must be simultaneous progress between the diplomatic and economic processes, which he said must be advanced in small steps.