JERUSALEM, Israel - Israeli Prime Minister Benjamin Netanyahu called Tuesday's brouhaha over 1,300 new housing units in two Jerusalem neighborhoods "overblown."
"You are talking about a handful of apartments that really don't affect the map at all, contrary to impressions that might be perceived from certain news reports," Netanyahu told Fox News on Tuesday.
In Jakarta, President Obama told reporters "this kind of activity is never helpful when it comes to negotiations."
EU Foreign Policy chief Catherine Ashton said Europe was "extremely concerned" and "the decision should be reversed."
The two neighborhoods slated for additional housing are Ramot Alon and Har Homa.
Ramot Alon - in the northwest corner of the city - was established in 1974. It's a heterogeneous neighborhood with a population of about 50,00 residents, both religious and secular.
Har Homa is built on a hill south of Jerusalem's Old City. Planning for the neighborhood began in 1968, and today it is home to some 16,000 residents, with a projected population of 25,000.
Late Tuesday, the Prime Minister's Office issued a comprehensive statement in response to the announcement.
"Jerusalem is not a settlement; Jerusalem is the capital of the State of Israel," the prime minister's spokesman said on his behalf.
"Israel has never accepted...restrictions of any kind on construction in Jerusalem, which has approximately 800,000 residents, including during the ten months in which construction was suspended in Judea and Samaria [the West Bank]," he said.
Netanyahu added that construction in Jerusalem neighborhoods had not hindered negotiations in the past.
"Construction in Jerusalem has never hindered the peace process," Netanyahu said, and there have always been differences between the Israel and the U.S. over Jerusalem.
"The disagreements with the U.S. over Jerusalem are well-known. They are not new and have continued for 40 years. We hope to overcome them and continue to advance the diplomatic negotiations," the prime minister's spokesman said.
Netanyahu is scheduled to meet with Secretary of State Hillary Clinton on Thursday before returning home.