The city of Jerusalem has many diplomatic missions that have the official title of consulate general. These include the US, most Western European and Scandinavian countries, as well as Turkey.
These diplomatic missions report directly to their capitals and they are not accountable officially to their counterparts from their country's diplomatic missions in Israel and, more recently, in Ramallah.
This practice has been going on since the Ottoman/Turkish rule in Palestine and the region in the 19th century.
After the creation of Israel in 1948 these missions continued to operate mostly in East Jerusalem (some, like the Americans, owned property in West Jerusalem) and they have continued to work after the June 1967 occupation.
While these missions mostly served the Palestinian community politically, culturally and consular wise, the only difference after 1967 was that these missions widened their (mostly consular) services to all the population of Jerusalem. The US consulate in East Jerusalem continued to provide consular and cultural services while the building owned by the Americans in West Jerusalem's Agron Street became the residence of the US consul-general and later housed caravans that provided space for USAID officials working in the Palestinian areas.
American citizens who lived in the Greater Jerusalem area as well as the rest of the West Bank (both Israelis and Palestinians) were restricted to the Nablus Road consulate in East Jerusalem for their consular affairs.
Despite numerous calls by congress to move the US embassy from Tel Aviv to Jerusalem, the executive branch in Washington was able to apply the waiver provided in the congressional law to insist on maintaining the status quo.
As long as the status of Jerusalem was among the final status agenda items, the US refused to determine who the holy city belongs to.
US diplomatic officials, therefore, refrained to specify a country of birth when it came to anyone who was born in Jerusalem, whether of a Jewish-Israeli background or a Palestinian-Arab background.
The politically correct US mission in Jerusalem refused to assign the country of birth to those born in Jerusalem as either Israel or Palestine. Instead they came up with a clever diplomatic side step. Under country of birth, American consular officials put "Jerusalem".
For some time this diplomatic compromise worked, until theUS congress passed a law and a patriotic Israeli-American couple wanted to have their child's birth listed as Jerusalem, Israel.
US officials refused, saying this was in the executive branch's decision-making power as it, and not the legislative branch, decides foreign policy.
The angry Israeli-American suggested that Americans be given the choice of listing their country of birth as either Jerusalem or Israel.
Again the US State Department and White House refused, feeling that this choice can't be given to a Palestinian whose country of birth can't be legally stated as Palestine and, therefore, listing only Israelis born in Jerusalem as being born in Israel would clearly discriminate against Palestinians.
Every passport officer in the world would know (if the idea had been approved) that if they see someone listed as being born in Jerusalem they are in fact ethnically Palestinian.
The US State Department refused the request and the case was brought to the US court of appeals.
The US court of appeals for the District of Columbia, which reviewed the case of Menachem Binyamin Zivotofsky filed by his parents against the US secretary of state, ruled on July 23 that "Jerusalem-born Americans, whether supporters of Israel or supporters of Palestine, may not use their passports to make a political statement". It also reaffirmed that the executive branch and not the legislative branch of the US government decides such issues.
The pro-Israel lobby, which has a greater stranglehold over congress than the White House (especially a second term president), will undoubtedly be unhappy with this ruling.
The timing of this decision is crucial as the issue of Jerusalem will surely be a major topic of discussion if the expected negotiations between the Israelis and Palestinians are launched in the coming weeks and months.
The wisdom of the US court to keep out of a volatile conflict such as the Palestinian-Israeli one, and an even more sensitive issue of Jerusalem, is welcomed.