JERUSALEM — Israel will not restrict construction in east Jerusalem, Israel's prime minister said Sunday hours before he left for Washington, despite a clear U.S. demand that building there must stop and a crisis in relations between the two longtime allies.
Benjamin Netanyahu's meeting with President Barack Obama Tuesday will be the first high-level meeting since the crisis erupted 10 days ago, when Israel embarrassed visiting Vice President Joe Biden by announcing a plan for construction in a Jewish neighborhood in east Jerusalem, which is claimed by the Palestinians.
"As far as we are concerned, building in Jerusalem is like building in Tel Aviv" and there would be no restrictions, Netanyahu told his Cabinet.
This tough stance on Jerusalem has run into stiff opposition in Washington, but there were signs that Israel was working to ease the crisis. Cabinet ministers said that while there would be no formal freeze, construction in Jewish neighborhoods in east Jerusalem would be restricted, like Netanyahu's partial 10-month West Bank construction freeze.
At stake are the first peace contacts between Israel and the Palestinian government in more than a year.
The Palestinians agreed to mediated talks, but the Jerusalem construction flap has given them second thoughts. Israel said it prefers direct negotiations but would go along with the indirect format.
On Sunday, Netanyahu met with Obama's special Mideast envoy, George Mitchell, who is set to mediate. He delivered the White House invitation to the prime minister.
At the meeting with Netanyahu, Mitchell said, "Our shared goal ... is the resumption of negotiations between Israelis and Palestinians in an environment that can result in an agreement that ends the conflict and resolves all permanent status issues."
U.S. officials have been dialing back the crisis rhetoric in recent days. The fact that a such a meeting was scheduled – even though the original purpose of Netanyahu's trip was not to meet Obama but to address a convention of AIPAC, the pro-Israel lobby – is a likely indication that the U.S. and Israel are succeeding in ironing out their differences.
The diplomatic package Netanyahu is offering the U.S. to ease the bilateral crisis has not been made public, but officials say one element is agreement to discuss all the outstanding issues with the Palestinians in indirect peace talks Mitchell is set to mediate. Those would include the future of Jerusalem, as well as borders, Jewish settlements and Palestinian refugees.
Netanyahu has always opposed compromise over Jerusalem. Israel captured the city's eastern sector from Jordan during the 1967 Middle East war and annexed it, a move not recognized by any other country. Over four decades, Israel has built a string of Jewish neighborhoods around the Arab section of the city.
Most Israelis consider them part of the Jewish state, but Palestinians equate them to West Bank settlements, considered illegal under international law.
Previous rounds of unsuccessful peace talks have included a formula for Israel retaining the Jewish neighborhoods while Palestinians got sovereignty over the Arab sections, but Netanyahu pointedly took that off the table when he took office a year ago.
In Gaza Sunday, U.N. Secretary-General Ban Ki-moon called on Israel to end its blockade on Gaza, imposed after Palestinian militants captured an Israeli soldier in 2006 and tightened when the Islamic militant Hamas overran the territory the following year. Israel allows only basic humanitarian supplies into Gaza.
The blockade causes "unacceptable suffering" and "undercuts moderates and encourages extremists," Ban said after visiting a housing project in the Khan Younis refugee camp. "My message to the people of Gaza is this: The United Nations will stand with you, through this ordeal."
Most of the 15,000 homes destroyed or damaged during Israel's war in Gaza last winter have not been repaired because of the ban on importation of most building supplies. Israel launched the war after years of militant rocket fire from Gaza.
In West Bank violence Sunday, the Israeli military said troops in the West Bank shot dead two Palestinians carrying pitchforks and an ax who tried to attack a soldier.
Another Palestinian died of a head wound from a clash with Israeli soldier the day before. His brother was killed in the same protest.
Also Sunday, the Israeli military said it would build a checkpoint on lands of the Palestinian West Bank village of Betunia to search vehicles before they cross onto a major highway that links Jerusalem and Tel Aviv.
Israel's Supreme Court ordered the military to allow Palestinians to travel on parts of the road that were closed to them in 2002, after Palestinian militants shot at Israeli vehicles and killed several motorists.
Associated Press Writer Karin Laub contributed to this report from Gaza City, Gaza Strip.