Prime Minister Benjamin Netanyahu on Monday dismissed international criticism of Israel's recently announced plans to build in an area near Jerusalem, saying it's "simply not true" that the settlements are an obstacle to Palestinian statehood.

"I don't understand how this will prevent territorially the establishment of a Palestinian state," Netanyahu said, referring to Israeli construction in the area east of Jerusalem and west of Ma'aleh Adumim - the so-called E-1 area.

Israel announced the plan to build in E-1 on November 30, the day after the United Nations voted to upgrade the Palestinian status at the world body to non-member observer state, in effect tacitly endorsing Palestinian statehood.

The Israeli announcement has stirred a storm of protest, and the European Union said Monday it was "deeply dismayed by and strongly opposes" Israeli plans to expand settlements in the E-1 area.

"The E-1 plan, if implemented, would seriously undermine the prospects of a negotiated resolution of the conflict by jeopardizing the possibility of a contiguous and viable Palestinian state and of Jerusalem as the future capital of two states," foreign ministers said.

They also urged the Palestinian leadership "not to undertake steps which would deepen the lack of trust and lead further away from a negotiated solution."

Netanyahu rejected the argument that building prevented Palestinian statehood as being "simply not true, it's false."

He also complained about the "deafening silence" after statements on Saturday by Hamas leader Khaled Meshal calling for Israel's destruction.

"The leaders of Hamas openly called for the destruction of Israel. Where was the outrage? Where were the UN resolutions? Where was [Palestinian] President [Mahmoud] Abbas?" Netanyahu said.

"There was nothing. There was silence. And it was deafening silence. Well, we can't accept that," Netanyahu said, adding "Israel will not remain silent."

Netanyahu also said that if, as polls predict, he receives another mandate in the elections set for January 22, then he will maintain his policy of not entering into negotiations with Palestinians if pre-conditions, such as a building freeze, are attached.

The comments came hours after senior Palestinian negotiator Saeb Erekat said a joint Palestinian-Arab delegation, bolstered by the United Nation's vote, will visit the United States, China and Britain next month with a fresh initiative to resume peace talks for up to six months.

Peace talks have been stalled since September 2010, when Israel refused a Palestinian demand to extend a 10-month partial moratorium on settlement building.

On the topic of Iran's suspected nuclear weapons drive, Netanyahu said this "was and remains the number one challenge that we face."

"Today," he said, "there are very tough sanctions on Iran and the international community is focused on this danger."

"But," he added "we have to be honest. There is not any evidence that sanctions have stopped Iran's nuclear program."

He said that when Iran crossed the "red line" he outlined in a September 27 speech to the United Nations - of finishing the medium enrichment stage by next summer, at the latest, and moving on to the final stage - then the chances of halting the nuclear weapons program would be significantly reduced.

"Iran is two and a half months closer to crossing that red line," he said, "and there is no doubt that this is a major challenge that will have to be addressed next year."