Tensions Mount Between the U.S. and Israel

A sudden crisis has erupted between Israel and its indispensable ally, the United States. And in an apparent effort to bring about change in Jerusalem's governing coalition, Obama seems intent on heightening, rather than smoothing over the tensions.

The falling out was triggered by the announced approval last week of an East Jerusalem housing project, just when Vice President Joe Biden was visiting Israel. The United States and, of course, the Palestinians consider those neighborhoods to be illegal settlements. And the timing could hardly have been worse: Obama's Middle East mediator, former senator George Mitchell, had been scheduled to push forward with "proximity talks"--hopefully meaningful, though not face-to-face--between Netanyahu and the Palestinian leader in the West Bank, Mahmoud Abbas. Mitchell is still expected in Jerusalem and Ramallah this week, but sharper tensions--and a natural Palestinian curiosity as to what concessions Obama may wring from Israel--make progress unlikely.

Instead of talking the crisis down, the Obama Administration is now reportedly demanding that Israel take a number of steps that Netanyahu would surely see as humiliating and even unthinkable if he is to keep key right-wing political parties in his governing coalition. According to high level Israelis unwilling to be named, Obama's demands include:

1. Fully explain why the housing announcement was made while Biden was in Jerusalem, and take bureaucratic steps to ensure that top-level U.S. officials are never again embarrassed by the kind of declaration that American mediators used to call "a stick in the eye" just about every time they flew to Israel to push for peace talks.

2. Declare, even before talks with the Palestinians begin, that the topics addressed will include the thorniest issues: refugees, the borders of a new Palestinian state, Jerusalem's status, how to share water, the fate of settlements, and future rights for refugees.

3. Make a major gesture to Abbas, such as releasing hundreds of Palestinian prisoners, so as to strengthen the position of Yasser Arafat's chronically weak successor. The Obama Administration would also like to see an easing of the siege around the Hamas-ruled Gaza Strip, as long as credit for the improved situation would go to the American-backed Abbas.

4. Reverse the decision to approve 1,600 new housing units for Jews in East Jerusalem.

Looking closely at the list--and Netanyahu has a special committee of cabinet ministers who began examining it on Saturday night--it seems that if he is to keep his coalition intact he could perhaps acceptably abide by #1, dance around #2, surely go along with #3, but never ever agree to #4, because Israel annexed the parts of Jerusalem it captured in 1967 and insists that the whole city is the Jewish State's capital.

If Netanyahu did reverse approval for the new housing, the powerful religious Jewish party Shas would likely bolt, and the prime minister's minority Likud party would therefore no longer command a 61-seat majority in the Knesset. As a result, new elections might be required.

If Netanyahu is forced out, few tears would be shed in Washington. He plainly has not gotten along with Obama on peace process issues, though they do perhaps see eye-to-eye on the extreme threat of Iran's nuclear program.

Presented by

Dan Raviv is a CBS News correspondent in Washington, formerly based in Tel Aviv and London, and co-author of Every Spy a Prince: The Complete History of Israel's Intelligence Community and Friends In Deed: Inside the U.S.-Israel Alliance.

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