This article was originally published by Al-Ahram Weekly and is republished with permission.

Israeli soldiers scuffle with human rights activists on the outskirts of the West Bank village of Beit Ummar, near Hebron. Human rights workers regularly accompany three Palestinian families living in the area in order to deter hard-line settlers from the nearby Bat Ayin settlement from attacking them while they tend their fields. (Mamoun Wazwaz, Maan Images)

Last week, the Obama administration informed Israel that the demanded freeze on settlement building applied to East Jerusalem as well as to the rest of the West Bank. Israeli sources said the State Department had summoned Israeli Ambassador to Washington Michael Oren, informing him that plans for the construction of a vast housing complex in Arab East Jerusalem must be terminated.

The "unusual" American message infuriated the Israeli government, prompting Prime Minister Binyamin Netanyahu to declare that East Jerusalem was not occupied territory but rather "part of Israel's eternal and undivided capital". The brazenly mendacious remarks, however, seemed directed at Netanyahu's extreme right-wing partners who are firmly opposed to ending the decades-old Israeli occupation of the West Bank on religious and ideological grounds.

Israel occupied East Jerusalem from Jordan in 1967, annexing it shortly afterwards.

Adding to his remarks, Netanyahu argued that it was unfair to bar Jews from building homes in the eastern part of Jerusalem when the city's Arabs were free to build or purchase homes in the western part. "We cannot accept the idea that Jews will not have the right to live and buy [homes] anywhere in Jerusalem," Netanyahu said.

In fact, since 1967, not a single Palestinian home gained permission to be built in West Jerusalem despite the propagandistic claim that the city is "united and undivided" and all of its inhabitants are treated equally. Moreover, while Israel built more than 50,000 settler units for Jews in and around East Jerusalem, not a single apartment was built by the Israeli state for the town's Palestinian inhabitants.

Furthermore, it is well known that thousands of Palestinian families still own homes and property in West Jerusalem dating back to 1948 when entire Palestinian neighbourhoods, such as Ein Karem, Lifta and Al-Malha were purged of their Palestinian inhabitants and repopulated with Jewish immigrants from around the world. It is believed that as much as 95 per cent of land in West Jerusalem is actually owned by Palestinians.

This week, the building of the housing complex in the heart of the Palestinian Sheikh Jarrah neighbourhood in East Jerusalem became the latest point of contention between Israel and the Obama administration. The huge complex, funded by Irving Moskowitz, a Florida-based bingo and gambling magnate, is designed to serve as an incentive for the acquisition of more Arab property and real estate.

The ongoing construction has infuriated the Palestinian Authority (PA) whose leader Mahmoud Abbas has accused the Israeli government of "being interested first and foremost in stealing and Judaising Jerusalem and altering its Islamic and Christian identity". Abbas has also said that the PA would not return to the negotiation table with Israel as long as the Jewish state continued to build settlements.

Another Palestinian official, former chief negotiator Saeb Erekat, also warned that all "Obama's efforts, which we appreciate, could evaporate if Israel continues to build and expand settlements." He added: "Settlements and peace are two parallels that don't go together."

As part of "managing the crisis" with Washington over the settlement issue, Israel has been promising that it will dismantle illegal outposts and refrain from confiscating more Palestinian land. However, it seems that these promises, made to US Middle East Envoy George Mitchell by Israeli Defence Minister Ehud Barak earlier this month, contain very little substance.

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In fact, Israel is continuing to confiscate privately owned Palestinian land for the purpose of expanding and servicing Jewish colonies built on stolen Arab land. The Israeli newspaper Haaretz reported 21 July, that Israel was planning to seize hundreds of hectares of private Palestinian land near the northern West Bank colony of Ofra. The plan of seizure blatantly contradicts assurances made by Netanyahu to US officials that the Israeli government would desist from confiscating more Palestinian lands as part of implementing the US-backed roadmap plan for peace.

Another Israeli tactic aimed at giving the impression that Israel is serious about dismantling "illegal" settler outposts takes the form of showing off Israeli soldiers struggling with fanatical settlers resisting the removal of their "homes". In fact, many if not most of the estimated 23 outposts the Israeli army has been ordered to remove happen to be unpopulated and merely used as rallying point for settlers who are bent on preserving the occupation.

But the settlers, most likely in connivance with the Israeli army and government, seem determined to make a big show out of this minor effort in order to give the impression that the Israeli government would risk a Jewish civil war if it carried out US demands for freezing settlement expansion and dismantling settler outposts in full.

This week, herds of Jewish settlers torched large swathes of Palestinian orchards and olive groves in retaliation against the evacuation by the army of a few mobile homes from a hilltop near Nablus in the northern West Bank. Settlers also attacked Palestinian motorists and vandalised Palestinian property, in full view of Israeli army troops who refused to intervene.

Mitchell and US Defense Secretary Robert Gates are due to visit Israel in the coming weeks in an additional effort to get Netanyahu to freeze settlement construction. According to observers here, Netanyahu will likely throw, as always, the proverbial ball into the Arab or US court by linking any possible settlement freeze with the acquisition of high-profile gains for Israel, such as gaining Palestinian recognition of Israel's "right" to exist as a Jewish state, or obtaining a promise from Arab states of unconditional normalisation with Israel.

In the final analysis, the Obama administration will soon reach a "moment of truth" with Netanyahu. How the US administration deals with that moment will determine the success or failure of Obama's strategy not only in Palestine but also arguably throughout the Muslim world.