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“Israel rejects this shameful anti-Israel resolution at the UN and will not abide by its terms,” a statement from Prime Minister Benjamin Netanyahu’s office said.
“The Obama administration not only failed to protect Israel against this gang-up at the UN, it colluded with it behind the scenes,” it said.
“Israel looks forward to working with President-elect (Donald) Trump and with all our friends in Congress, Republicans and Democrats alike, to negate the harmful effects of this absurd resolution.”
Israel also announced diplomatic retaliatory steps against Senegal and New Zealand, two of the four countries that pushed for a vote on the resolution. Israel does not have diplomatic relations with the other two, Malaysia and Venezuela.
In a rare and momentous step, the United States abstained from Friday’s vote, enabling the adoption of the first UN resolution since 1979 to condemn Israel over its settlement policy.
The text was passed with support from all remaining members of the 15-member council.
The landmark move by the Security Council came despite intense lobbying efforts by Israel and Trump to block the resolution.
But the Obama administration has grown increasingly frustrated with settlement building in the West Bank, which Israel has occupied for nearly 50 years.
There have been growing warnings that settlement building is fast eroding the possibility of a two-state solution to the Israeli-Palestinian conflict, the basis of years of negotiations.
Settlements are constructed on land the Palestinians view as part of their future state and have long been seen as illegal under international law.
The United States has traditionally served as Israel’s diplomatic protector, shielding it from resolutions it opposes.
It is Israel’s most important ally and provides it with more than $3 billion per year in defence aid.
But there had been mounting speculation that Obama would allow such a resolution to pass before he leaves office on January 20.
Trump has signalled he is likely to be far more favourable to Israel.
His nominee for ambassador to the country, David Friedman, favours moving the embassy to Jerusalem and has voiced support for settlement building.
Harsh words for Obama
Obama and Netanyahu have had testy relations, but Israel’s statement after the vote was particularly harsh toward the US administration, as were comments earlier in the day from an anonymous Israeli official.
Earlier on Friday, the Israeli official said that Obama and US Secretary of State John Kerry were “behind this shameful move against Israel at the UN”.
After the vote, Netanyahu ordered Israel’s ambassadors in New Zealand and Senegal to return for consultations, a statement from his spokesman said.
Israel also called off a planned visit by the Senegalese foreign minister in three weeks, while all aid programmes to Senegal were cancelled.
Meanwhile, a spokesman for Palestinian president Mahmud Abbas called the resolution a “big blow for Israeli policies.”
The move was “an international and unanimous condemnation of settlements and strong support for the two-state solution,” Nabil Abu Rudeina told AFP.
Saeb Erekat, a former peace negotiator and the number two in the Palestine Liberation Organisation (PLO), spoke of a “historic day”.
“December 23 is a historic day and a victory for international legitimacy, international law and international documents,” said Erekat.
The resolution demands that “Israel immediately and completely cease all settlement activities in the occupied Palestinian territory, including east Jerusalem.”
It states that Israeli settlements have “no legal validity” and are “dangerously imperilling the viability of the two-state solution” that would see an independent Palestine co-exist alongside Israel.
Some 430,000 Israeli settlers currently live in the occupied West Bank and another 200,000 in annexed east Jerusalem, which the Palestinians see as the capital of their future state.