The Consulate of the United Kingdom in Israel, complied a report, in cooperation with the Foreign Ministry, slamming Israel for its settlement constructions in east Jerusalem, and accusing Israel of sabotaging the Peace Process with the Palestinian Authority, The Guardian British newspaper reported on Friday.

E.U Foreign Ministers decided to delay the debate over the report until next week, upon the request of Italy, and decided not to publish the report which involves the Israeli activities which endangers the future of Jerusalem in any peace talks between Israel and the Palestinians.
The decision to delay the debate on the report came as a result of the recent improvement of relations between Italy and Israel.
The Israeli plan involves land annexation, settlements activities and leveling Palestinian homes.
The report concluded that Israel is guilty of breaking international laws, encouraging members of extremist groups, and sabotaging the peace process by continuing the construction of settlement in eastern Jerusalem.
The Guardian reported that a confidential Foreign Office document accuses Israel of rushing to annex the Palestinian area of Jerusalem, using illegal Jewish settlement construction and the vast West Bank Separation Wall, in a move to prevent it becoming a Palestinian capital.
The document revealed that Ariel Sharon’s government is jeopardizing the prospect of a peace agreement by attempting to put the future of Arab East Jerusalem beyond negotiation.
The UK Consulate report was presented, on Monday, to the EU council of ministers meeting which was headed by the EU the foreign secretary, Jack Straw. It was presented with recommendations to counter the Israeli policy if annexing the Arab part of the city.
The recommendations also included the recognition of the Palestinian political activities in East Jerusalem. 
The Guardian added that the EU council out this issue on hold until next month under Italian pressure; Israel considered Italy the most reliable “ally in the EU”.
Meanwhile, Israel considered the recommendation for moving the EU meetings with the Palestinian Authority from Ramallah to Jerusalem as recognition of east Jerusalem as the capital of the future Palestinian State.
The east of Jerusalem was captured along with the West Bank and the Gaza strip in the 1967 war and is considered part of the occupied territories. Israel insists that the east of Jerusalem is part of what it described as it “inseparable capital”. 
Also, the document says that the Israeli policies are designed to prevent Jerusalem from becoming a Palestinian capital, particularly by settlement expansion in and around the city.  
For instance, the EJ 1 project, which intends to link Maali Adumim settlement with Jerusalem by constructing thousands of homes for the settlers, intends to block the geographical contiguity of the Palestinian areas by dividing the West Bank into two separate areas, and isolating the Arab part of Jerusalem from its surrounding Palestinian territories.   
The report accuses Israel of directly violating the Road Map Plan and the International Law.
The document says strict Israeli controls on the movement of Palestinians in and out of the city are an attempt to restrict Arab population growth and, “When the Separation Wall is completed, Israel will control all access to East Jerusalem, cutting off its Palestinian cities of Bethlehem and Ramallah, and the West Bank beyond.
“Israel’s main motivation is almost certainly demographic. The Jerusalem master plan has an explicit goal to keep the proportion of Palestinian Jerusalemites at no more than 30% of the total”, the document reads.
This, the document adds, significantly reduces the prospects of a two-state solution, “especially since the core of the Palestinian demands is sovereignty over the east of the city”.
“Palestinians are deeply alarmed about East Jerusalem” the document says, “They fear that Israel will annex Jerusalem and isolate the Arab side under the cover of disengagement”.