Bigger than Jerusalem Day

Jerusalem Day will go forward on May 12, but a march through the Old City on the national holiday almost didn't happen-another reminder of heightened security and tension over frayed U.S.-Israeli relations, stemming from, of all things in an age of terrorism, a battle over city housing.

At one point late last month Jerusalem's police chief called off the traditional march through the heart of the Muslim Quarter and to the Western Wall in commemoration of Israel's capture of Jerusalem during the Six Day War in 1967, but lawmakers in Israel's Knesset and the mayor prevailed to keep the tradition.

Israeli Arabs and Palestinians themselves have been marching in the same streets since an announcement of expanded housing within the city came from the Interior Ministry during the March state visit of Vice President Joe Biden. The Palestinians were on the verge of returning to talks when Israeli officials revealed plans to build 1,600 new Jewish homes in a traditionally Arab sector of Jerusalem. What initially was portrayed as a misstep, with Prime Minister Benjamin Netanyahu's office saying he wasn't aware of the plans, hardened into a policy statement by April when Netanyahu declared: "There will be no freeze [on housing construction] in Jerusalem."

The Palestinian Authority-with a go-ahead from the Arab League-launched talks last week anyway. But the untimely announcement earned Israel a sharp rebuke from Washington and plunged relations with the United States to their lowest point in years. Israel's supporters blame that on the Obama administration, but there is more here than meets the eye-and it's an important part of upcoming talks.

Housing construction was much debated in the 2008-09 Israeli election campaign, which Netanyahu won. Netanyahu himself, in a nationally televised speech last June, called on Palestinian leaders to join in peace negotiations and said: "The territorial issues will be discussed in a permanent agreement. Till then we have no intention to build new settlements or set aside land for new settlements."

Many Americans are surprised to learn that private property is a near-unknown in modern Israel. According to the Israel Land Authority, 93 percent of the land in Israel is in the public domain-either property of the state, the Jewish National Fund (JNF), or a development authority. The process of expanding housing in Jerusalem is inherently political-involving a government-led bidding process, approved contractors, and long-term leases that regularly devolve into land tenure disputes-all supervised by a government-approved council. Arab residents (over 20 percent of the city's population) see Jewish neighborhood expansion at the expense of Arab development and cohesion-the Ramat Shlomo development, where the 1,600 units are to go, was founded in 1995 with a few hundred ultra-Orthodox residents, and within five years had a population of 18,000. At the same time Arab extremists like Hamas want to make all of Israel waqf, or endowed in perpetuity to the Muslim community.

Why is this important to the Obama administration? One reason is that times have changed, from when Israel was the lone democracy in the region and a bulwark against Cold War enemies to now, when it stands beside another fledgling democracy the United States has heavily invested in, Iraq. Call it a litmus test, but U.S. military commanders say that progress in the Israeli-Palestinian conflict will aid progress in Iraq and Afghanistan, where the president is trying to negotiate U.S. exits (that most Americans want also). "Americans see this as a modest request, while Israelis see it as an attack on their sovereignty," points out Stratfor founder George Friedman. That has many Republicans calling folks like Gen. David Petraeus "political"-a stick that Democrats used to beat him with during the debate over a surge in Iraq three years ago. The immediate complexity-U.S. exit strategy plus Iranian nuclear armament multiplied by Islamic militancy-presents a greater challenge than ever for a U.S.-Israeli partnership, one that should be forged out of tough words and tough love. As Friedman says, the day after any Israeli strike on Iran, and region-wide conflict, it "will be left to the United States to manage." If you have a question or comment for Mindy Belz, send it to mbelz@worldmag.com.