The US has demanded that Israel suspend a planned project in east Jerusalem, senior Israeli officials said Sunday - the latest sign of a deepening conflict between the two allies over Israeli settlements.
The officials confirmed that Israel's ambassador to the US, Michael Oren, was summoned to the State Department over the weekend and told that the project being developed by American millionaire Irving Moskowitz should not go ahead.
The officials spoke on condition of anonymity because they were not authorized to discuss with the media diplomatic flaps with the US. Spokesmen for the US Embassy and the Jerusalem municipality had no comment.
The international community considers Jewish neighborhoods in east Jerusalem to be settlements and an obstacle to Israeli-Palestinian peacemaking.
Israel Radio and Army Radio reported Sunday that the US has summoned Oren and demanded that planning approval for the project be revoked,
The project is being developed by American millionaire Irving Moskowitz and is near Israel's national police headquarters. The radio reports said Israeli planning authorities have approved the project.
In response to the demands Prime Minister Benjamin Netanyahu said at the start of Sunday's cabinet meeting, "Our sovereignty in Jerusalem is indisputable. We can't agree to such a demand in east Jerusalem."
"I wish to make this clear – the united Jerusalem is the capital of the Jewish people in the State of Israel," he added.
The project in question is the construction of the Shepherd Hotel in the east Jerusalem neighborhood of Sheikh Jarrah.
"Israel is building in Jerusalem and will build in the future. The Israeli enforcement and planning bodies are in charge of this. This is private land. Up until now, there has been no criticism of Israel in Washington over construction in Jerusalem," a top government source said.
Foreign Minister Avigdor Lieberman also commented on the demand, calling it "unthinkable".
"There are many Arab families that build homes in the Neve Yaakov and French Hill neighborhoods. I have never heard any remarks on this matter, neither from the United States, nor from Europe," he said.
"This is not an isolated distant Palestinian neighborhood. Should we of all people discriminate against Jews? This is unthinkable," he added.
'US demands prove dangers of settlement talks'
However, other sources said it would be unwise to get into a dispute with the Americans over the matter at such a sensitive time.
One source said, "It would be best if all involved, including the Jerusalem Municipality, demonstrate restrain in order to find an educated solution that is acceptable to all parties in the settlement issue."
Minister of Information and Diaspora Yuli Edelstein said such a demand to halt the construction of a project just meters from the Hebrew University "proves how dangerous it is to get dragged into talks of a settlement freeze".
"Such talks will lead to a demand to completely freeze our lives in the entire State of Israel," he added.
MK Ofir Akunis, head of the Likud's response team said, "There is a broad consensus in the Israeli public around Jerusalem's unity as the eternal capital of Israel.
"All countries of the world should understand that attempts to endanger Jerusalem's unity and Israel's sovereignty in it, will be rejected immediately."
Science and Technology Minister Daniel Hershkowitz said the demand "proves that whoever demands a settlement freeze in Judea and Samaria will eventually also demand construction be frozen in the government offices in Sheikh Jarrah.
"I invite the US administration representatives to visit my office in Sheikh Jarrah, so they can witness Israel's sovereignty in the united Jerusalem".
Earlier Sunday it was reported that Prime Minister Benjamin Netanyahu's scheduled meeting with US Mideast envoy George Mitchell was postponed at least until the end of the month.
Another meeting between the two, which was set to take place in Paris last month, was also cancelled.
Mitchell was originally due to arrive in Israel on Sunday and later hold meetings with senior Palestinian officials in Ramallah. Jerusalem did not state the official reason for the delay, but some officials suspect it relates to the fact that the Netanyahu and Obama administrations have yet to resolve their differences on the issue of settlement expansion in the West Bank.