Why Netanyahu is engaging Obama in a spat over E. Jerusalem 'settlements'

Zvi Hauser, a spokesperson for Netanyahu, told Israel Radio on Wednesday morning that the prime minister knew of the new approvals for some 1,300 new housing units in the Jewish neighborhoods of Har Homa and Ramot, located in areas incorporated into the city when the borders of Jerusalem were dramatically expanded after 1967 to buttress the Israeli military's hold on the city.

SPECIAL REPORT: How Israeli-Palestinian battle for Jerusalem plays out in one neighborhood

The publication of the approvals just as Netanyahu visited with Vice President Biden in New Orleans on Sunday upset the Obama administration, recalled a similar incident on Biden's March visit to the region.

After the escalation Tuesday, Mr. Hauser attempted to play down the dispute as exaggerated by the Israeli and international media.

"The dispute between US and Israel over building in Jerusalem is 40 years old," he said. "This bilateral dialogue is much more moderate than the headlines."

Hard-line allies praise Netanyahu for standing up to US

Netanyahu is already being praised by hard-line allies for standing up to the Obama administration. Danny Danon, a parliament member from the prime minister's party said in a statement, "President Obama has apparently not yet internalized the results of last week's election in the United States."

The US is trying to persuade Israel to agree to a new two- to three-month settlement building freeze, and Israel is believed to be seeking to improve a US package of security guarantees to help sell the proposal.

But after the publication of new building in Jerusalem, some commentators believe that Obama needs to more move more forcefully in persuading Israel to accept a new freeze. Gershon Baskin, the director of the dovish Israel Palestine Center for Research and Information, says that after the Congressional loss, Israel's actions on Jerusalem is undermining the president's standing.

"The US has already used carrots with Israel and now it has to get the sticks out of its tool box" on the freeze, he says. "These actions of going head-to-head with Obama weaken Obama in the US and the world."

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