• MIDDLE EAST NEWS
  • Updated August 14, 2013, 11:59 a.m. ET

Israel Stirs Hope, Ire Before Peace Talks

Release of Palestinian Prisoners Comes With Approval of New Housing Units in Contested Area

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BY CHARLES LEVINSON

TEL AVIV—Israel gave final approval for the construction of about 900 new housing units in contested East Jerusalem on Tuesday, inflaming Palestinian frustrations with new settlements on the eve of the resumption of talks, and overshadowing the release of 26 long-held Palestinian prisoners meant as a goodwill gesture.

Yet the Palestinians still intend to go ahead with the talks on Wednesday. And a key inner circle of Israeli officials and peace advocates, who have doubted their government's commitment to talks before, are saying they believe Israel is pursuing a real peace deal for the first time in years.

In recent ...

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