Israeli leader Benjamin Netanyahu stands firm on new settlement plans near Jerusalem

Israeli Prime Minister Benjamin Netanyahu and German Chancellor Angela Merkel address the media during a press conference at the Chancellery in Berlin Dec. 6, 2012. AP Photo

Updated at 9:31 a.m. ET

BERLIN Israel's prime minister brushed off international uproar over a planned new settlement project near Jerusalem, claiming Thursday that Israel will keep the area under any future peace deal in any case.

Israel's plans to build 3,000 new settler homes in the corridor east of Jerusalem triggered sharp criticism in Europe — including from Germany, traditionally one of Israel's most stalwart allies. The move came after the U.N. General Assembly voted to support a Palestinian statehood bid — with Germany abstaining rather than voting against.

Meanwhile, Jordan's King Abdullah II paid a rare visit to the West Bank on Thursday in a show of support for the successful bid by Palestinian President Mahmoud Abbas.

Abbas and the king are political allies, and last met Sunday in Jordan, during one of the Palestinian leader's frequent stops in the neighboring kingdom. But Thursday's visit was just the third time the king has visited the West Bank, and the first time in more than a year.

The king's arrival - a red carpet welcome with military honors - gave a high-profile boost of support to the U.N. bid, which has come under fierce Israeli criticism. Jordan is one of just two Arab countries with a peace agreement with Israel, so Abdullah's public support was significant.

Netanyahu's tough comments were the latest sign that he has no plans to step back from his plans to develop the area. On Wednesday, initial plans for the project were unveiled, though officials stressed it could be years before construction actually begins.

German Chancellor Angela Merkel appeared anxious to downplay tensions between the two countries, saying after meeting Netanyahu that, as far as Israeli settlements on land that the Palestinians want for a future state are concerned, "we agree that we do not agree."

Palestinians say building settler homes in the so-called E1 corridor would make it impossible for them to establish a viable state in the West Bank.

Nabil Abu Rdeneh, a senior adviser to Abbas, said it "is a red line, and there will be no solution in the presence of this project."

"After the decision of the U.N. General Assembly, every centimeter in Jerusalem and the West Bank is Palestinian land, and every Israeli settlement is illegal," he said.

The Jordanians spoke out sharply against Israel's plans.

"The settlement policy is not only rejected from our side as Arabs and Palestinians, but also by the whole world," Abdullah's foreign minister, Nasser Judeh, said.

Neither Abdullah nor Abbas commented publicly after meeting.

Netanyahu offered no indication that his government might be prepared to backtrack. The contentious corridor is small, he told reporters, and "successive governments from Yitzhak Rabin on down to my predecessor, Mr. (Ehud) Olmert, have also said this would be incorporated in a final peace treaty."

Olmert wanted to keep the corridor under Israeli control under a final peace deal, but reportedly opposed any development of the area before a peace agreement is reached. A spokesman for Olmert did not immediately return a message seeking comment.

The Palestinians note that no agreements were ever reached.

The area could sever parts of the West Bank from east Jerusalem, their hoped-for capital. Linked to an existing bloc of settlements, the sprawling area would also drive a deep wedge between the northern and southern flanks of the West Bank, greatly hindering movement.

The unusually tense build-up to Netanyahu's long-planned trip to Germany, one of Israel's closest allies in Europe, reflected the increasing displeasure in Europe at his government's seeming intransigence, particularly over Jewish settlements on lands the Palestinians want for a future state.

Six friendly European countries summoned the local Israeli ambassadors to file protests, and the U.S. has condemned the latest settlement plans. On Wednesday, the Palestinians asked the U.N. Security Council to call on Israel to halt the planned construction.

In an interview with German newspaper Die Welt published on Wednesday, Netanyahu said that he "was disappointed, as were many people in Israel, by the German vote in the U.N." on Palestinian statehood.

"I took note of this," Merkel said at the two leaders' joint news conference at which she stressed anew Germany's commitment to Israel's security.

"We did not take the vote, and our position, lightly," Merkel said. "We are against unilateral measures, so we didn't vote yes — that was very carefully considered. On the other hand, there is a certain amount of movement on the recognition of two states, which at many points in time we didn't have with the Palestinians."

Netanyahu stressed that despite the vote, Germany and other European countries have been among Israel's strongest allies and remain committed to helping ensure its security.

"I don't think that we lost Europe," he said of the vote.

In addition to the E1 project, Israel has responded to the Palestinians' U.N. move by cutting off a regularly scheduled $100 million tax transfer to the cash-strapped Palestinian Authority, and announced plans for several thousand new homes in existing settlements in the West Bank and east Jerusalem.

Israel's monthly tax transfers to the Palestinians - the result of taxes and customs duties that Israel collects on behalf of the Palestinians - are a key element in the Palestinian government budget. The government has already struggled to the pay the salaries of its tens of thousands of workers.

In a statement, Palestinian Prime Minister Salam Fayyad called on the international community to press Israel to release the funds and urged wealthy Arab countries to send $240 million a month to keep the government afloat while Israel withholds the money. Israel has taken similar measures in the past, ultimately releasing the money under international pressure after several weeks.

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