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France's Veolia pulls out of Jerusalem tram project

Nov. 30, 2010 8:40 A.M. (Updated: Dec. 2, 2010 12:44 P.M.)
JERUSALEM (AFP) -- A division of French engineering group Veolia has pulled out of a controversial Jerusalem tramway project in favor of an Israeli bus operator, a spokesman for the group said on Monday.

Yoni Yitzhak told AFP in a written answer to questions that Veolia Israel last month agreed to sell its five-percent stake in a consortium building and set to run the city's light rail project to the Egged bus company.

He denied allegations by rival suitor company Dan that the company was selling out because of Palestinian political pressure and threats of a trade boycott over the project, which runs through annexed east Jerusalem and links Jewish settlements there with the city center.

"Like every business, the Veolia Israel group weighs its activities according to financial and business considerations," he wrote. "According to those considerations it makes its decisions."

Dan, which is suing Veolia over what it says is a broken agreement to sell it the stake in the consortium, says the French firm is backing out because of boycott threats to its parent company by Arab and other pro-Palestinian groups overseas.

"That's what Veolia told us," Dan spokesman Eitan Fixman told AFP.

Israel considers mostly Arab east Jerusalem, which it seized and annexed in the 1967 Six-Day war, to be part of its "eternal, undivided" capital, while the Palestinians demand it as the capital of their future state.

The international community does not recognize Israel's claim to east Jerusalem, and European Union foreign ministers meeting last week stated their concern at Israeli settlement activities in the sector.

Israel and the United States are at present wrangling over the terms for a new freeze on Jewish settlement in the West Bank.

The expiration in September of a previous 10-month freeze on such construction led to the breakdown of direct peace talks between Israel and the Palestinians.

Palestinian president Mahmoud Abbas has said he will not return to talks without a new freeze that includes a halt to Jewish construction in east Jerusalem. Israel says such a condition is out of the question.
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