- The Washington Times - Monday, July 20, 2009

JERUSALEM | Israel on Sunday rejected a U.S. demand to suspend a planned housing project in East Jerusalem, threatening to further complicate an unusually tense standoff with its strongest ally over settlement construction.

Israeli officials said the country’s ambassador to Washington, Michael Oren, was summoned to the State Department over the weekend and told that a project made up of 20 apartments developed by an American millionaire should not go ahead.

Settlements built on captured lands claimed by the Palestinians have emerged as a major sticking point in relations between Israel and the Obama administration because of their potential to disrupt Middle East peacemaking.

Although Prime Minister Benjamin Netanyahu recently yielded to heavy U.S. pressure to endorse the establishment of a Palestinian state, he has resisted American demands for an immediate freeze on settlement expansion.

On Sunday, Mr. Netanyahu told his Cabinet there would be no limits on Jewish construction anywhere in “unified Jerusalem.”

“We cannot accept the fact that Jews wouldn’t be entitled to live and buy anywhere in Jerusalem,” Mr. Netanyahu declared, calling Israeli sovereignty over the entire city “indisputable.”

“I can only imagine what would happen if someone suggested Jews could not live in certain neighborhoods in New York, London, Paris or Rome. There would certainly be a major international outcry,” he said.

The international community considers Jewish neighborhoods in East Jerusalem to be settlements and an obstacle to Israeli-Palestinian peacemaking because they complicate a possible division of the city. Israel does not regard them as settlements because it annexed East Jerusalem after capturing the area in 1967. The annexation has not been recognized internationally.

East Jerusalem is an especially volatile issue because it is the site of key Jewish, Christian and Muslim holy sites. The Palestinians want the traditionally Arab sector of the city to be the capital of their future state.

Speaking Sunday in New Delhi, Secretary of State Hillary Rodham Clinton said the administration was trying to reach an agreement with the Israelis on settlements.

“The negotiations are intense. They are ongoing,” she said.

Nearly 300,000 Israelis live in West Bank settlements, in addition to about 180,000 Israelis living in Jewish neighborhoods in East Jerusalem.

The new Jerusalem project is being funded by Irving Moskowitz, a millionaire bingo magnate from Florida and supporter of Israeli settlement in East Jerusalem who has funded similar construction projects in the past. Mr. Moskowitz purchased the Shepherd Hotel in 1985 and plans to tear it down and build apartments in its place.

The approval, granted by the Jerusalem municipality earlier this month, allows for the construction of 20 apartments plus a three-level underground parking lot. The Jerusalem municipality issued a statement saying the purchase was legal.

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