Israel said Monday that it will build nearly 700 new apartments in occupied east Jerusalem, drawing tough criticism from both the Palestinians and the United States, which denounced the plan as an obstacle to peacemaking. Prime Minister Benjamin Netanyahu announced a slowdown in West Bank settlement construction several weeks ago in hopes of bringing the Palestinians back to the negotiating table. But the order did not include construction in occupied east Jerusalem, home to sensitive Jewish, Muslim and Christian holy sites. “We make a distinction between the West Bank and Jerusalem. Jerusalem is our capital and remains such,” said government spokesman Mark Regev. The Housing Ministry said it had approved a total of 692 new apartments in three existing Jewish neighborhoods already inhabited by tens of thousands of people. Israel does not consider its east Jerusalem neighborhoods to be settlements. It captured the city's eastern sector in the 1967 Mideast war and immediately annexed the area. The international community does not recognize the annexation. “We condemn this Israeli policy of continuing settlement activities, and we hope this will be an eye opener for the US administration and other members” of the international community, said Palestinian official Saeb Erekat. The Palestinians have refused to reopen peace talks, which broke down a year ago, until Netanyahu halts all settlement construction in the West Bank and occupied east Jerusalem. For months, the United States has been trying to bring the sides together. An Israeli official said the government had informed the Obama administration about the latest planned construction. He spoke on condition of anonymity because he was not authorized to discuss the matter with the media. However, a US official said the construction was another blow to peace efforts.