The move was condemned world-wide, by Hillary Clinton, Catherine Ashton, Ban Ki-Moon, and many others, and of course by the Palestinian leadership. The condemnations all claimed the new apartments will be in East Jerusalem, and thus part of Palestine, and therefore no Jews may be allowed to live there and if they are this will prevent the division of the city and peace.
Set aside the legal aspects of the matter, not because they aren't interesting, but because they've been set aside by all the negotiating parties for at least the past decade. When on December 24th 2000 President Clinton slowly dictated his terms for peace to a group of Israeli and Palestinian negotiators, he determined that Jerusalem would be divided along the lines of ethnic division, irrespective of which part of the town had been in which country prior to its unification under Israel in 1967; his proposed lines would have had some Jordanian areas incorporated to Israel, and some Israeli ones incorporated to Palestine. Ever since then the principle of division along the ethnic lines has been the single option discussed in all relevant forums, effectively overriding earlier discussions of history, legality, morality or what have you.
I have written repeatedly about how this practical solution is not practical, and indeed should anyone ever try to impose it, the imposition will inevitably lead to violence bloodshed and eventually back to war (here, for example, and here). I have demonstrated this on various parts of town. (Here, here and here, for example), Today I suggest we have a close look at the situation on the ground at the Shepherd Hotel compound.
First, the general area. Here's a Google Earth screenshot of the area to the north of the Old City in which the compound lies. (You can see part of the Old City at the bottom of the picture). Note that pre-1967 there was an island of Israeli territory to the east of the line of division; this is Mount Scopus, and before the division the Hebrew University and Hadassah Hospital had been there; after the division the Israelis had to shut them both down, even though they were still in Israeli territory, because the Jordanians wouldn't allow access to the mountain.
After unification in 1967, the Israelis built Jewish neighborhoods bridging the gap and connecting Mt. Scopus to Jewish Jerusalem. In the Geneva Initiative application of Clinton's principles, the change on the ground will look like this:
Here, lets see it all closer up.
The yellow dot is the spot across from the entrance to the Shepherd complex where I stood earlier this afternoon and took four snapshots, one in each direction. West, into the compound:
North. The blue roofed compound is the sport center of the Hebrew University, and the 1967 line goes through its middle.
East. The HU campus is above, the buildings below are part of the Arab neighborhood of Wadi Jose, and the road between them is the highway to Maale Edumim.
If the health center stays in Israel, the fence between it and the Shepherd Hotel compound will then be an international border. If there are Israelis living in the Shepherd area by the time the border gets drawn, the other fence of the compound will be the border. It's hard to see how either scenario is an existential threat to peace making, since the two fences are about 150 yards apart.
On the other hand, it's easy to see why the whole concept of drawing an international border along fences of properties might perhaps not be such a good idea. In the real world, I mean. From time to time I take foreign visitors for walks along the line the peace-makers propose, and am often asked why they don't see the division can't possibly work. I have no answer to this. Then my visitors ask me what the solution will be: if dividing the city will be a calamity, how do we reach peace? So far as I know, no-one has an honest answer to that.