(Edited from AP, Washington) The Jerusalem municipality has approved 20 new apartments for Jews in an Arab neighborhood of east Jerusalem, the city said Wednesday, in a move that could stir a new diplomatic crisis with the United States just as Israel’s leader is in Washington on a fence-mending visit.

(Edited from AP, Washington) The Jerusalem municipality has approved 20 new apartments for Jews in an Arab neighborhood of east Jerusalem, the city said Wednesday, in a move that could stir a new diplomatic crisis with the United States just as Israel’s leader is in Washington on a fence-mending visit.

 

The announcement marked the second time this month that Israel has announced new construction in the disputed section of the holy city during face-to-face meetings between top U.S. and Israeli officials.

 

There was no immediate American reaction. But Israeli lawmaker Eitan Cabel accused Prime Minister Benjamin Netanyahu of unnecessarily provoking the U.S.

 

The U.S. views Israeli building in east Jerusalem, the part of the city claimed by Palestinians as their future capital, as disruptive to Mideast peacemaking. Israel, which captured east Jerusalem in the 1967 Mideast war, insists the city cannot be divided and says it has the right to build anywhere.

 

These differences erupted into a crisis earlier this month when Israel announced during a visit by Vice President Joe Biden that it plans to build 1,600 new apartments for Jews in east Jerusalem.

 

Israel has apologized for the poor timing of the announcement but rejected calls to cancel the project. In Washington this week, Netanyahu reiterated his tough stance, telling a pro-Israel audience that Israel was determined to keep building in all of Jerusalem. The statement was quickly rejected by the U.S.

 

The new project threatens to be even more contentious than the earlier one because it is located in Sheikh Jarrah – an Arab neighborhood in the heart of east Jerusalem. Past efforts to move Jewish residents into Arab neighborhoods have often led to protests and even violence.

 

Word of the approval was leaked to an Israeli Web site minutes before Netanyahu met with Obama at the White House on Tuesday. Netanyahu met with President Barack Obama in an attempt to defuse what has become the countries’ worst spat in decades. But the latest announcement, confirmed Wednesday, by Jerusalem city officials threatened to derail any progress. In Washington, Netanyahu spokesman Mark Regev had no comment on the approval for the new building project.

 

It was unclear whether the issue came up in the White House meetings.  

 

Peace Now, an Israeli anti-settlement watchdog, discovered the latest building plan.

“It seems that the municipality of Jerusalem has it own policy that might be devastating for the peace process and Netanyahu wasn’t clear enough in order to stop them from allowing further provocation in east Jerusalem,” said Peace Now spokeswoman Hagit Ofran.

 

Jerusalem city officials have tried to play down the project as a zoning issue.

 

Mayor Nir Barkat says he is committed to bettering the city for all residents, but vociferously opposes the notion of sharing sovereignty over the city. He has repeatedly said he will continue to promote housing construction in all parts of the city.

 

City spokesman Gidi Schmerling said the project was approved last July, and the recent approval was merely a procedural step after developers paid a final fee for some paperwork. He said media reports were blowing the matter out of proportion, saying they were “meant to create a provocation during the prime minister’s visit in the U.S.”

 

At the time of the approval last July, the U.S. demanded that Israel suspend the project and even summoned Israel’s ambassador to Washington over the issue.

 

Palestinian negotiator Saeb Erekat condemned the plan, and said it damaged Israel’s credibility as a peace partner.

 

“There is growing international frustration with Israel over the actions and decisions it is taking,” Erekat said. “Israel is digging itself into a hole that it will have to climb out of if it is serious about peace. There is overwhelming international consensus on the illegality of Israel’s settlements, including in east Jerusalem, and the damage they are doing to the two-state solution.”

 

Israel annexed east Jerusalem after capturing it in the 1967 Mideast war, but the move was never recognized internationally. The international community sees Jewish neighborhoods in east Jerusalem as no different from settlements in the West Bank.

 

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

 

In his visit, Israeli Prime Minister Benjamin Netanyahu received a warmer public reception from Congress than from the Obama administration, with a top Democrat and Republican joining Tuesday to welcome a leader who has refused to back down in a disagreement with the White House over Israeli housing expansion in a disputed part of Jerusalem.

 

“We in Congress stand by Israel,” the leader of the House, Speaker Nancy Pelosi, assured Netanyahu at an all-smiles appearance before the cameras. “In Congress we speak with one voice on the subject of Israel.”

 

President Barack Obama met with Netanyahu later Tuesday. The Obama administration appears eager to let Netanyahu’s awkwardly timed visit pass with as little public remark as possible, and has refused to detail what promises Netanyahu is making to ease the most serious diplomatic breach between the two nations in decades.

 

Neither side has publicly detailed which steps, if any, Netanyahu has proposed to defuse tensions. Netanyahu has given no indication that he will agree to halt or slow Israeli building in Jerusalem, which the administration has said — in an unusually blunt and public fashion — is harming peace efforts and ties between the U.S. and Israel.

 

In his meeting with Pelosi, Netanyahu asserted that Israel had been building in east Jerusalem since the 1967 Mideast war, when it captured the West Bank from Jordan, and that the matter had “never been a subject of argument among us or in the U.S.,” according to Netanyahu’s office. The Jewish neighborhoods built in east Jerusalem will remain part of Israel in any final status deal with the Palestinians, he told Pelosi, so building there doesn’t harm the chances for peace.

 

The Palestinian demand for a halt to building in Jerusalem as a precondition for peace talks, Netanyahu said, will serve only to delay peace talks further. Netanyahu said the sides “must not be trapped by an unreasonable and illogical demand.”

 

The abrupt rescheduling Monday of Netanyahu’s planned trip to the State Department for what had been billed as a public meeting with Secretary of State Hillary Rodham Clinton underscored the uneasy atmosphere. Netanyahu’s meeting with Clinton took place at his hotel and was closed to the press.

 

It was followed by a private dinner at Vice President Joe Biden’s home on Monday night that was meant to salve hurt feelings from two weeks ago, when Netanyahu’s government announced a provocative housing expansion in east Jerusalem while Biden was visiting the city. Netanyahu said he was unaware of the move, blaming low-level bureaucrats, but an angry and embarrassed Biden was reportedly 90 minutes late for a dinner with the Israeli leader.

 

Both nations are now trying to move on without backing down.

 

“We have no stronger ally anywhere in the world than Israel,” said House Republican Leader John Boehner. “We all know we’re in a difficult moment. I’m glad the prime minister is here so we can have an open dialogue.”

 

Other Republicans have weighed in on Israel’s side, criticizing the Obama administration for its handling of the crisis.

 

“I never thought I’d live to see the day that an American administration would denounce the state of Israel for rebuilding Jerusalem,” Rep. Mike Pence of Indiana said on the House floor Tuesday after meeting Netanyahu. “I urge the president to stop all this talk about settlements in Jerusalem and start focusing on isolating a threatening and menacing and rising nuclear Iran,” he said.

 

Pelosi and Boehner both pointed to the threat from Iran as a top concern and an area in which the United States will cooperate with Israel. Netanyahu thanked his congressional hosts for what he called warm, bipartisan support. “We face two great challenges”, Netanyahu said, a “quest for peace with our Palestinian neighbors” and stopping Iran from developing atomic weapons.

 

Obama has remained out of the fray as Clinton and other U.S. officials have rebuked Israel.

 

P.J. Crowley, the State Department spokesman, told The Associated Press that the U.S. and Israel were currently engaged in “give and take.”

 

“We are not going to talk about the precise steps both sides have to take. We will continue to discuss those steps privately,” Crowley said.

 

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