"This disturbing development undermines peace efforts to achieve the two-state solution," Clinton said in a statement in Abu Dhabi, where she is on an official visit. "In particular, this move contradicts the logic of a reasonable and necessary agreement between the parties on the status of Jerusalem."
The European Union had also strongly condemned the demolition. "I strongly condemn this morning's demolition of the Shepherd Hotel and the planned construction of a new illegal settlement," EU foreign policy chief Catherine Ashton said in a statement earlier on Sunday.
She reminded that the settlements are "illegal" under international law, adding that "It undermines trust between parties and constitutes an obstacle to peace."
Israeli bulldozers destroyed the hotel compound in East al-Quds to build 20 new settler units on the occupied Palestinian land, defying international calls for putting an end to Tel Aviv's demolitions.
Tel Aviv is planning to build the new settlement units in the Arab neighborhood of Sheikh Jarrah.
Ashton reiterated that "the EU does not recognize" the annexation of East al-Quds by Israel and expressed concern for recent violence in the West Bank, amid escalating Israeli-Palestinian tension.
Meanwhile, British Foreign Office Minister Alistair Burt said that "the British Government reaffirms its strong, long-standing opposition to the creation of this new illegal settlement in occupied East al-Quds and condemns today's demolition in Sheikh Jerrah." The establishment and expansion of settlements in the occupied Palestinian territories are "illegal," said Burt.
France on Monday condemned Israel's demolition of an east Jerusalem hotel complex, saying it would undermine the so-called peace process with the Palestinians. "The settlements, including those in east Jerusalem, are illegal under international law and constitute an obstacle to peace," foreign ministry spokesman Bernard Valero told reporters. "It is therefore imperative in this respect that the parties abstain from any provocation," he said.
"We see this matter as extremely dangerous," said Hatem Abdel Qader, the Palestinian official who oversees East al-Quds affairs for acting Palestinian Authority Chief Mahmoud Abbas.
However, Israeli Prime Minister Benjamin Netanyahu's Bureau issued a statement Monday saying that the Israeli government was not involved in the demolition, adding that the building of apartments on the site corresponded with “Israeli law”.
"Actions taken at the Shepherd Hotel were done by private people corresponding with Israeli law," the Prime Minister's Bureau wrote in a statement. "The Israeli government was not involved in the events." "It cannot be expected from the State of Israel to forbid Jews from purchasing private property in Jerusalem. There is no democratic country in the world that would impose such a ban on Jews and it cannot be expected that Israel will be the one to do so."
"Just as Jerusalem's Arab citizens are allowed to buy or rent assets in Jerusalem's neighborhoods that have a Jewish majority, Jews are allowed to rent property in a Jerusalem neighborhood with an Arab majority."
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