Paris Says Not Ready to Back Sanctions on Israel over Settlement

French President Francois Hollande said Monday he was worried by Israel's plans to build new settlements in east Jerusalem and the West Bank, but indicated Paris was not ready to back concerted punishment in response.

"We do not want to start thinking in terms of sanctions," Hollande said during a Franco-Italian summit in Lyon.

U.N. Security Council permanent members Britain and France as well as Denmark and Sweden summoned Israel's ambassadors to express deep concern and call for the reversal of plans to build 3,000 settler homes in a project that could effectively cut the West Bank in two.

Germany and Russia also criticized the Israeli plans, which U.N. chief Ban Ki-moon warned could wipe out peace hopes.

But Israel, whose settlement building on occupied Palestinian land has been a constant thorn in the side of efforts to reach a peace deal, insisted it would not back down.

"Israel continues to insist on its vital interests, even under international pressure. There will be no change in the decision that has been made," a source in Prime Minister Benjamin Netanyahu's office said.

Israel has faced a wave of top-level diplomatic protests after the construction proposals emerged on Friday as payback for the Palestinians winning the rank of a U.N. non-member observer state in a vote on Thursday.

Some of the construction is to take place in a contentious corridor of land called E1, an area of the West Bank that runs between the easternmost edge of annexed east Jerusalem and an Israeli settlement, Maaleh Adumim.

France said it had summoned the Israeli ambassador to express its "grave concern" over the settlement plan.

"Construction in the E1 area would seriously undermine the two-state solution by isolating Jerusalem... from the West Bank and threatening the territorial contiguity and viability of a future Palestinian state," foreign ministry spokesman Philippe Lalliot said.

The Israeli embassy said its envoy had "clarified the Israeli position by explaining that it was impossible to expect Israel to stand idly by after the unilateral Palestinian move at the U.N."

Britain's Foreign Office said it had called in Israel's envoy to "deplore" the decision and urge Israel to reconsider the settlement plans.

"We have told the Israeli government that if they go ahead with their decision, then there will be a strong reaction," the Foreign Office said, without elaborating.

London and Paris also rejected media reports that they were planning the unprecedented step of recalling their ambassadors to Israel over the plans.

Germany, one of Israel's closest allies, said it was "deeply concerned" about the settlement plans but did not follow other European capitals in summoning the Israeli ambassador.

"We urge the Israeli government to reverse this announcement," government spokesman Steffen Seibert told a media briefing.

Seibert said a Berlin meeting this week between Chancellor Angela Merkel and Netanyahu and most of their cabinets would go ahead as planned.

Russia, a veto-wielding member of the Security Council, also urged Israel to rethink its plans, saying the project "will negatively affect efforts to restart direct talks".

Palestinians bitterly oppose the E1 project, as it would effectively cut the occupied West Bank in two, north to south, and sever it from Jerusalem, making the creation of a contiguous Palestinian state almost impossible.

Plans to link Jerusalem with the Maaleh Adumim settlement, which lies some five kilometers (three miles) from the city's eastern flank, have long been espoused by Israeli hardliners, but were put on hold in 2005 following strong opposition from Washington.

They were resurrected last week following Thursday's U.N. vote, dealing a harsh diplomatic blow to Israel, which vowed to "act accordingly".

Israel has also said it would not transfer this month's tranche of millions of dollars worth of tax and tariff funds it collects for the Palestinians.

Washington and Brussels also raised concerns about the settlements plan and on Sunday, U.N. chief Ban issued a strongly worded warning.

"Settlements are illegal under international law and, should the E1 settlement be constructed, it would represent an almost fatal blow to remaining chances of securing a two-state solution," Ban said.

Peace talks have been frozen since September 2010 largely over the issue of settlements, which are considered illegal under international law.