Pressure is building on the White House to get the buffeted Mideast peace process back on track.
In "emotional" discussions in Washington, Palestinian leader Yasser Arafat made it clear to President Clinton and Secretary of State Madeleine Albright that he expects the US to take steps to "stop what has been attempted" by the Israelis in East Jerusalem.
Mr. Clinton is certain to face similar pressure during upcoming visits by Egyptian President Hosni Mubarak and King Hussein of Jordan.
Just a few weeks ago, prospects had brightened for the Clinton administration's efforts to keep the Middle East peace process moving forward.
Persistent American mediation in January broke a deadlock on an Israeli troop pullout from the West Bank city of Hebron. That was followed by talks in Washington between Clinton and Israeli Prime Minister Benjamin Netanyahu on restarting long-stalled negotiations between Israel and Syria.
But Mr. Netanyahu's decision last week to construct 6,500 Jewish homes in East Jerusalem, coveted by the Palestinians as the capital of their future state, has dealt an abrupt setback to the administration's hopes of building on its Hebron success.
"After the completion of the Hebron talks ... there really was a restoration of a certain level of trust and confidence," State Department spokesman Nicholas Burns says. "Now we are faced with a challenge."
While Clinton must address the concerns of Mr. Arafat and other Arab leaders, he faces a largely pro-Israel Congress that regards Arafat as the chief obstruction to implementation of the 1993 Oslo peace accords on Palestinian self-rule.
US officials pledge to work to resolve the damage done by the latest Israeli action, but it is not clear exactly what leverage the US can - or will - use to compel Israel to reverse its decision.
US officials and Arafat are not talking about how that may be accomplished. On March 4, during a four-day US visit, Arafat said only that "I am sure they [US officials] intend to push forward and protect the peace process." He also allowed that "we have no other alternative but to carry on with the peace process."
Independent analysts say the Israeli decision shreds any expectations that a resolution to the Middle East's most intractable dispute is within reach.
"We are talking about a process that will last at least a decade," asserts Anthony Cordesman, co-director of Middle Eastern studies at the Center for Strategic and International Studies here.
Israel decided to construct new Jewish homes on a largely barren hill - known as Har Homa by the Israelis and Jabal Abu Ghneim by the Palestinians - on the edge of East Jerusalem, which Israel captured in the 1967 Arab-Israeli war. The project, which would nearly complete the encirclement of East Jerusalem by Israeli settlements, shows Israel's determination to keep the city as its undivided capital.
The Israeli move comes just weeks before Israeli and Palestinian officials are to begin "final status" negotiations on the thorniest of their disputes, including the eventual status of Jerusalem.
The Palestinians denounce the Israeli decision as a violation of the Oslo accords and an attempt to preempt the resolution of Jerusalem's final status. Arafat says the move could unhinge the peace process.
Officially, the US position is that the status of Jerusalem should be decided in the "final status" negotiations. But the Israeli decision clearly riled Clinton, who criticized the move as building "mistrust."
US officials privately are sympathetic to the pressure Netanyahu is under from hard-liners within his Cabinet who were enraged over his agreement to withdraw Israeli troops from Hebron. They see the construction decision as a sop to those elements. Some analysts say that rather than pressure Netanyahu to reverse the decision, the US may seek compensation for the Palestinians in other areas of the peace process and intensify relations with Arafat and his Palestinian Authority.
In a move in the latter direction, the administration announced plans for a high-level US-Palestinian commission on economic and political policies. The US has formed such commissions only with Russia, Egypt, and South Africa.