EGYPTIAN President Hosni Mubabrak has welcomed the Israeli cabinet’s decision to transfer full control of three villages near Jerusalem to the Palestinians. “The decision to return the three villages to the Palestinian Authority is a step in the right direction,” Mubarak said in a statement published by the state-owned MENA news agency. One of the villages concerned is Abu Dis, which Israel has long touted as a possible capital of a future Palestinian state to avoid giving up sovereignty over all of Jerusalem. Mubarak said he hoped Israel “will follow up with other steps to reinforce the peace process and stability in the region,” MENA said. The fate of Jerusalem is one of the most sensitive issues to be tackled in negotiations between Israel and the Palestinians aimed at forging a final peace accord by a September deadline.