ARAB US RELATIONS - July 19 - Israel Rejects US Call To Halt Project.

Israel's PM Benjamin Netanyahu, rejects a US call to halt construction on a controversial project in mostly Arab east Jerusalem. The move increases tensions with the country's staunchest ally over expansion of Jewish settlements. The premier's statements came after a senior Israeli official confirmed that the US state department had over the weekend summoned Michael Oren, the country's ambassador to Washington, to demand the plan be suspended. Netanyahu, speaking at his weekly cabinet meeting, reiterated his stance that Israeli sovereignty over the entire city of Jerusalem is "indisputable" and said: "We cannot accept the idea that Jews will not have the right to live and purchase [homes] in all parts of Jerusalem". He added: "I can only imagine what would happen if someone would suggest that Jews could not live in certain neighbourhoods of New York, London, Paris or Rome. There would certainly be a major international outcry". His words were met with a robust response from the US, which has demanded Israel freeze all Jewish construction in the occupied West Bank and east Jerusalem. Palestinians want the city's eastern part, which Israel captured in the 1967 war, as the capital of their future state. "President [Barack] Obama and Secretary [Hillary] Clinton have been clear - both publicly and privately - with the government of Israel: these types of activities must stop", said US state department spokesman. He added: "Our policy on Jerusalem has not changed. Jerusalem is a final status issue. Israel and the Palestinians have agreed to resolve its status during negotiations. The bottom line is we expect all the parties in the region to honour their commitments, and for the Israelis, that means a stop to activities such as this in sensitive areas, including in east Jerusalem". Netanyahu's stance may also hamper recent efforts by George Mitchell, the US Middle East envoy, and Ehud Barak, Israel's defence minister and the leader of the only centrist party in Netanyahu's coalition, to reach a compromise on settlements. Mitchell is expected to meet the Israeli PM in Jerusalem later this month. The construction project is being funded by Irving Moskowitz, an American-Jewish businessman, who plans to tear down a now-defunct hotel he bought in 1985 and build apartments on the site. Palestinians have cast doubt on the legality of Moskowitz's purchase of the hotel, which once belonged to Haj Amin al-Husseini, a former leading Muslim cleric in Jerusalem who went into exile in 1947. Yossi Alpher, an Israeli political analyst, said Netanyahu's comments were aimed at clarifying to the US and the Palestinians that he plans to make no concessions on Jerusalem. Furthermore, he added, the statements were a bid to appease the premier's ultra-nationalist and religious coalition allies, who support settlement construction and oppose the creation of a Palestinian state. He said: "Netanyahu is staking out a negotiating position on Jerusalem and is trying to hold his coalition together. This will only exacerbate the existing disagreements between the Netanyahu government and the Obama administration over this issue". In spite of the tensions, it was announced that Robert Gates, US defence secretary, would visit Israel next weekend.