Matthew Lee
Associated Press
July 21, 2009 - 12:00am

The special U.S. envoy for Middle East peace departs for the region this week amid new signs of tension between the Obama administration and the Israeli government over settlement construction.

Former Sen. George Mitchell plans to visit Israel, the Palestinian territories and several neighboring countries, including Bahrain, an itinerary still being worked out Monday.

He will head for the region as the administration tries to build Arab support for a resumption in Israeli-Palestinian peace talks, a mission complicated by American divisions with Israeli Prime Minister Benjamin Netanyahu on settlements. Dissension flared anew over the weekend when Netanyahu rejected a U.S. demand to suspend a planned housing project in east Jerusalem.

State Department spokesman P.J. Crowley confirmed Monday that the project had been a topic of conversation last week during a meeting between senior U.S. diplomats and Israel's ambassador to the United States, Michael Oren. Crowley said U.S. opposition to construction in East Jerusalem and settlements in the West Bank had not changed.

"We have made our views known to Israel," he told reporters. "Our views are not new either, that this kind of construction is the type ... of issue that should be subject to permanent-status negotiations."

Crowley added that "we are concerned that unilateral actions taken by the Israelis or the Palestinians cannot prejudge the outcome of these negotiations."

U.S. officials said that at last week's meeting, Deputy Secretary of State for Management Jacob Lew told Oren that Washington was troubled by the Jerusalem housing project that calls for construction of 20 apartments developed by an American millionaire. The officials spoke on condition of anonymity to discuss a sensitive diplomatic exchange.

The spat emerged publicly on Sunday when Netanyahu told his Cabinet there would be no limits on Jewish construction anywhere in "unified Jerusalem."

"We cannot accept the fact that Jews wouldn't be entitled to live and buy anywhere in Jerusalem," he said, calling Israeli sovereignty over the entire city "indisputable."

The international community considers Jewish neighborhoods in east Jerusalem to be settlements and an obstacle to peacemaking because they complicate a possible division of the city. Israel does not regard them as settlements because it annexed east Jerusalem after capturing the area in 1967. The annexation has not been recognized internationally.

Settlements on captured lands claimed by the Palestinians are a major sticking point in relations between Israel and the Obama administration. Nearly 300,000 Israelis live in West Bank settlements, in addition to about 180,000 Israelis living in Jewish neighborhoods in east Jerusalem.

East Jerusalem is an especially volatile topic because it is the site of key Jewish, Christian and Muslim holy sites. The Palestinians want the traditionally Arab sector of the city to be the capital of their future state. The Palestinians have refused to restart peace talks until Israel halts all settlement expansion.

Mitchell has been attempting to negotiate a deal under which Israel would at least temporarily freeze settlement activity in a bid to bring the Palestinians to the table and attract Arab concessions toward Israel.

Several options have been discussed, including a six-month freeze that would allow Israel to finish construction on some settlement projects that have already been contracted, but officials say no deal has yet been struck.


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