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The Palestinian Authority threatened not to pursue peace negotiations with Israel in protest of a controversial building project.

Unnamed Palestinian Authority officials said this week that after a tender was issued for the construction of 300 homes in the Jerusalem neighborhood of Har Homa, they may boycott a meeting with Israeli counterparts scheduled for Wednesday.

The talks are billed as the first stage of peace talks launched at last month’s Annapolis conference.

Nabil Amr, a senior adviser to P.A. President Mahmoud Abbas, played down the boycott threat Tuesday. But he said that the Palestinian Authority would continue pressing foreign mediators to stop the Har Homa project, which has been condemned by U.S. Secretary of State Condoleezza Rice and U.N. Secretary-General Ban Ki-moon as “unhelpful” to peace efforts.

The Palestinians say Har Homa is on West Bank land which they want for a state. Israel says the neighborhood is part of Jerusalem and that construction there does not violate its international commitments.

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