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Source: http://www.pmo.gov.il/English/MediaCenter/Events/Pages/eventmerkel061212.aspx
Netanyahu to Merkel: No Change in Israeli Policy on Building in Jerusalem and Tel Aviv Suburbs
(Israel Prime Minister's Office) Following a meeting with German Chancellor Angela Merkel on Thursday, Israeli Prime Minister Benjamin Netanyahu said: "We have been following the same policy for close to 45 years - that is, all Israeli governments have built in the Jewish neighborhoods of Jerusalem and in what are called the settlement blocs, which are really suburbs of Jerusalem and Tel Aviv....So that's not a new policy...and there hasn't been a change." The E1 area "is a small corridor between one of these suburbs east of Jerusalem - about 40,000 people live there. It's about two miles from Jerusalem. Successive governments from Yitzhak Rabin on down to my predecessor, Mr. Olmert, have also said that this will be incorporated in a final peace treaty....The Palestinians themselves, as revealed in leaked documents, understand that these blocs...are going to be part of Israel in a final political settlement of peace. So I have not changed the policy."