Ties between U.S. and Israel 'at their worst in 35 years' over housing row

By David Gardner and Matthew Kalman

DAILY MAIL 15th March 2010

Relations between the U.S. and Israel have sunk to their lowest point in 35 years, derailing hopes for peace in the Middle East.

Israel's ambassador to the U.S. admitted that the crisis was real and dismissed attempts to play down the diplomatic row.

Michael Oren said: 'Israel's ties with the United States are in their worst crisis since 1975 - a crisis of historic proportions.'

Israeli PM: Benjamin Netanyahu has defied U.S. demands to shelve the settlement expansion plan and said it 'in no way' hurts Palestinians

His remarks reflect the Obama administration's fury at Israel's announcement last week that it was building 1,600 new homes for Jews in occupied East Jerusalem.

The plan was unveiled in the middle of U.S. Vice President Joe Biden's peace-making trip to Israel. U.S. Secretary of State Hillary Clinton called Israel's behaviour 'insulting'.

Despite apologising for the timing of the announcement, Israel's Prime Minister Benjamin Netanyahu has defied U.S. demands to shelve the settlement expansion plan and said yesterday that it 'in no way' hurts Palestinians.

'For the past 40 years, no Israeli government ever limited construction in the neighbourhoods of Jerusalem,' he said in a speech in parliament.

And he said the construction of homes for Jews in the city's eastern sector 'in no way' hurts Palestinians.

'Very unfortunate': Hillary Clinton reacted angrily to news of Israel's plans for new settlement in East Jerusalem

EU foreign policy chief Baroness Ashton said the settlements were illegal and blamed Israel for jeopardising peace talks between Tel Aviv and Palestinian leaders.

In mentioning 1975, Mr Oren was referring to the crisis ignited between Israel and the U.S. by then Secretary of State Henry Kissinger's demand for a partial Israeli withdrawal from Egypt's Sinai Peninsula.

News of the new homes plan wrecked Mr Biden’s first visit to the region and threatens to torpedo talks between Israel and the Palestinians.

The Obama administration, which is trying to build an international coalition to block Iran’s nuclear weapons drive, sees the renewal of the peace process as vital to securing Arab support for sanctions against Iran.

Now the Palestinians say they will boycott the talks unless Israel cancels all new building in East Jerusalem. Both sides regard the disputed city as their capital.

Observers said they could not recall the last time Israel had suffered such withering criticism from the U.S., its closest ally.

Israeli opposition leader Tzipi Livni said Netanyahu was 'a prime minister who does not know what he wants. Israel is paying for its government's failure to make decisions and will continue to pay for it.'

The vice president publicly condemned the Israeli move and the Israeli ambassador was summoned to the State Department for a dressing-down.

Mrs Clinton's spokesman said the incident had 'undermined trust and confidence in the peace process.'

'The Israeli bilateral relationship with the United States has just become much more difficult,' said Haim Malka at the Centre for Strategic and International Studies in Washington.

'It is hard to remember a time when a senior U.S. official used the word "condemn" to describe the actions of any ally, let alone a close ally such as Israel.'

Wrecked: The news scuppered Joe Biden's (left) first visit to the region and threatens to damage talks between Israel and the Palestinians - Israeli Premier Benjamin Netanyahu apologised for the 'regrettable incident'

Abraham Foxman of the Anti-Defamation League, a liberal Jewish group with strong ties to the Democratic Party, said the American administration was guilty of 'a gross overreaction.'

'The administration should have confidence and trust in Israel whose tireless pursuit for peace is repeatedly rebuffed by the Palestinians and whose interests remain in line with the United States,' said Foxman.

The Palestinians, clearly delighted by Israel’s discomfiture, are trying to push home their advantage by demanding a complete building freeze in East Jerusalem as their price for entering the proximity talks. Israeli officials say that was never on the table.

Danny Danon, deputy speaker of the Knesset from Netanyahu’s Likud Party, accused Clinton of 'meddling in internal Israeli decisions regarding the development of our capital Jerusalem.'

Netanyahu is now caught between the right-wingers in his government and the need to appease the U.S. The last time he alienated the right wing in his previous coalition a decade ago, his government fell.

Meanwhile, Israel battened down the hatches to try and prevent new protests after a tense weekend in and around Jerusalem.

The moves come ahead of celebrations planned for Tuesday, when Israel will re-dedicate the Hurva, the largest synagogue in Jerusalem’s Old City which was destroyed by the Jordanians in 1948.

The army extended its closure on the West Bank, cutting off access to Israel for all but a few Palestinians, and male worshippers at the Al-Aqsa Mosque in Jerusalem were limited to those aged over 50.