JERUSALEM - The U.S. is pressing Israel to scrap a contentious east Jerusalem building project whose approval has touched off the most serious diplomatic feud with Washington in years, American and Israeli officials said Monday.
Israeli Prime Minister Benjamin Netanyahu, however, gave no indication he intended to cancel construction of the 1,600 housing units, despite condemnation from a string of U.S. officials. Instead, Netanyahu offered a defence of his country's building in the city's eastern sector, which the Palestinians want as their future capital, and noted that Israel has been building there for more than 40 years.
"The building of those Jewish neighbourhoods in no way hurt the Arabs of east Jerusalem and did not come at their expense," he said in parliament Monday.
Palestinians say Jewish building in east Jerusalem harms them in various ways. It eats up land they want for a future state, cuts off east Jerusalem from the rest off the West Bank and prevents the expansion of Arab neighbourhoods, they say. The Palestinians also point out that much of the land used for Jewish construction was expropriated from Arab owners.
Tensions in the city at the centre of the spat were high, with police out in large numbers in Jerusalem's volatile Old City in expectation of renewed clashes and Palestinian shopkeepers shuttering their stores for several hours to protest Israel's actions in the city.
Top U.S. officials have lined up in recent days to condemn the Israeli plan. The project was announced during Vice-President Joe Biden's visit to the region last week, badly embarrassing the U.S. and complicating its efforts to restart Israeli-Palestinian peacemaking.
Obama administration officials said Washington wants the project cancelled, though there have been talks with Israeli officials about alternative steps. Speaking on condition of anonymity because no announcement has been made, the officials said whatever Israel does must be a significant step to restore confidence and move peace efforts ahead.
Israeli government spokesman Mark Regev refused to comment Monday. But Israeli officials, speaking on condition of anonymity because no official decision has been made public, said Washington wants the construction project cancelled.
Although Netanyahu has apologized for the timing of the project's approval, he has not said he will cancel it.
Stephan Miller, a spokesman for the Jerusalem municipality, said the city will not change its current policies in any part of the city -- meaning Jewish construction in east Jerusalem will continue.
"We are developing the entire city for the benefit of all residents," he said. "We're moving forward, business as usual -- east, west, north, south."
Israel does not stand to benefit from antagonizing its most important ally, but Netanyahu has historically taken a hard line against territorial concessions to the Palestinians, and a curb on east Jerusalem construction would threaten to fracture his hawkish governing coalition.
The Israeli officials said the U.S. also wants Israel to make a significant confidence-building gesture toward the Palestinians, including possibly releasing hundreds of Palestinian prisoners or turning over additional areas of the West Bank to Palestinian control.
Washington, they added, also has demanded that Israel officially declare that talks with the Palestinians will deal with all the conflict's big issues, including final borders, the status of Jerusalem and the fate of Palestinian refugees who lost their homes during the war around Israel's 1948 creation.
The unusually harsh U.S. criticism has undercut Netanyahu's efforts to suggest that the crisis had passed. Israeli newspapers reported Monday that Israel's ambassador to Washington, Michael Oren, told Israeli diplomats in a conference call Saturday night that their country's relations with the U.S. haven't been this tense in decades.
U.S. Mideast envoy George Mitchell is expected in the region this week to try to salvage peace efforts.
For a fourth straight day, Israel deployed hundreds of police around east Jerusalem's Old City and restricted Palestinian access to the area in anticipation of possible unrest. Israel also maintained a closure that barred virtually all West Bank Palestinians from entering Israel.
Adding to tension, residents of the Old City's Jewish Quarter were to rededicate a historic synagogue that had been destroyed twice, most recently in 1948 by the Jordanian army, and was recently rebuilt.
Some Palestinians charged that Jewish extremists were planning to use the rededication to try to rebuild the Jewish Third Temple. Similar rumours in the past have brought out Palestinian protesters and sparked violence.
In the West Bank, dozens of young men burned tires and hurled rocks at Israeli forces manning a checkpoint north of Jerusalem. Troops dispersed the protesters, and Dr. Mohammed Eidi of the nearby Ramallah government hospital said one Palestinian youth was shot in the jaw and another in the chest, and that several others suffered less serious wounds.
The military said one soldier was injured.
