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The Palestinians rejoice, Israel retaliates

November 29th is a day of historic triumphs for both Palestinians and Israelis.

November 29th is a day of historic triumphs for both Palestinians and Israelis. This week the Palestinian Authority became a "non-member observer state" at the United Nations. On Nov. 29, 1947, the same U.N. body paved the way for the state of Israel. Ecstatic celebrations in the West Bank and Gaza following the UN vote this week mirrored the celebrations of Jewish immigrants in the Holy Land 65 years ago. But this victory for Palestinians dealt a major blow to the Israeli government.

Israel responded Friday by announcing plans to construct 3,000 new housing units on settlements in disputed parts of East Jerusalem and the West Bank. The move is seen by many as retaliation for the Palestinian UN bid, which Israeli and U.S. officials tried for nearly a year to thwart. The decision to expand settlements appears to be just the beginning of Israel's following through on promises to punish the Palestinians for pursuing statehood outside of the negotiating table.

On Andrea Mitchell Reports, Palestinian Prime Minister Salam Fayyad criticized the retaliation, adding that new settlement building would only further undermine the prospects for a viable two-state solution.

"I question the rationale for there to be need for retaliation," Fayyad told Andrea Mitchell. "What the Palestinians did yesterday was take advantage of an option that's available under international law and architecture. That's the United Nations--custodian of international law and legitimacy--the very same body that gave the birth certificate to the state of Israel 65 years ago."

The Palestinians were not alone in their condemnation of Israel on Friday. Despite serving as Israel's partner in opposing the Palestinian UN bid, Washington criticized the construction of settlements in East Jerusalem as counterproductive to achieving a two-state solution. "We're going to be evenhanded in our concern about any actions that are provocative, any actions that make it harder to get these two parties back to the table." State Department spokesperson Victoria Nuland said.

Israeli officials say the decision came late Thursday night to approve zoning for new homes in the contested area of East Jerusalem known as E1. The new homes would connect the settlement of Maale Adumim to Jerusalem, effectively blocking the connection of the Palestinian cities of Ramallah and Bethlehem to Palestinian neighborhoods in East Jerusalem.

Former U.S. Ambassador to Israel Martin Indyk suggested on Andrea Mitchell Reports  Friday that new Israeli settlement activity could lead the Palestinians to challenge Israel at the International Criminal Court, something the U.S. has been trying to avoid.

"If it produces a kind of punitive, vicious circle in which the Israelis now announce more settlement activity... and then the Palestinians decide to go to the International Criminal Court to charge Israel with some crimes, and then we get into a downward spiral, the Congress cuts the funds to the Palestinian Authority, we could be in very negative territory quite quickly."