East Jerusalem Israeli occupation 'only beginning'
Israel began marking 40 years since it conquered and annexed Arab East Jerusalem on May 14, but the ceremonies were boycotted by European and US diplomats.
"The last 40 years were only the beginning," Prime Minister Ehud Olmert told a special parliamentary session marking the anniversary according to the Hebrew calendar.
"I believe, I hope and I pray that we will continue to work together to reinforce Jerusalem in order to extend its boundaries."
On May 13, Olmert's government approved $1.5 billion to develop Israeli areas of Jerusalem and during the parliamentary session the following day the prime minister outlined the spending plans.
Olmert said: "We have the mandate and the duty to develop the city and strengthen its status as the capital."
Israel captured East Jerusalem on June 7, 1967, the third day of the six-day Middle East war, and unilaterally annexed the sector in a move not recognized by the international community.
Israel in 1980 passed a law declaring Jerusalem "the unified and eternal capital of Israel."
Israel's unilateral moves in Jerusalem have been condemned by UN Security Council Resolutions, including one in 1980 that resulted in 13 Jerusalem-based foreign embassies being moved to Tel Aviv.
A group of Israeli left-wing organizations issued a statement deploring the "deliberate marginalization of Palestinian districts in Jerusalem by the Israeli authorities [for] 40 years."
Palestinians are determined to make East Jerusalem, which includes the walled Old City and its holy sites, the capital of a promised future state.