OCCUPIED JERUSALEM: Israeli Prime Minister Benjamin Netanyahu, saying Jews have a right to live anywhere in Occupied Jerusalem, defended Monday a settlement project that drew criticism from US Secretary of State Hillary Clinton. Israeli bulldozers cleared the way for 20 new homes for Jews in East Jerusalem, an area captured by Israel in a 1967 war and which Palestinians want as the capital of a future state, by demolishing a derelict hotel Sunday. Clinton, in Abu Dhabi on a tour of US Gulf allies, called the Israeli action a ‘disturbing development' and said it “undermines peace efforts to achieve the two-state solution”. A statement issued by Netanyahu's office made no direct reference to Clinton's criticism, but said “there should be no expectation that the State of Israel will impose a ban on Jews purchasing private property in Jerusalem”. The Palestinian foreign minister says he will seek UN recognition for a Palestinian state in Sept. and is currently lobbying for votes worldwide. The move is part of the Palestinians' so-called Plan B of pursuing an alternative to a negotiated peace deal while talks with Israel remain stalled. Riad Malki's announcement Sunday followed Chile's recognition of Palestine, making it the fifth South American country to do so recently. While a majority for Palestine in the General Assembly seems possible, recognition by the Security Council – whose decisions are legally binding – would likely face an American veto. The September target date has the month shaping up to be a crucial one for the Palestinians. It also marks the time frame for President Barack Obama's goal of reaching a peace deal and Palestinian Prime Minister Salam Fayyad's hope of having the foundations of the future state ready. Fayyad has acknowledged that the recognition drive at the UN will not necessarily bring realization of a state. But it helps the Palestinians enshrine their demand that the 1967 borders serve as the basis for drawing their nation's shape. “Such recognition would create political and legal pressure on Israel to withdraw its forces from the land of another state that is recognized within the ‘67 borders by the international organization,” Malki, the foreign minister, told reporters in Ramallah.