05/25/2010 05:12 am ET Updated May 25, 2011

Latest US-Israeli Point Of Tension Sparked By American Developer's Housing Plans

This story has been updated

The latest housing controversy that's throwing a wrench in US-Israeli relations was sparked by an American developer, who's converting an old hotel in East Jerusalem into 20 apartments.

The approval of the project, funded by Florida-based philanthropist Irving Moskowitz, was announced on Tuesday -- the same day that Israeli Prime Minister Benjamin Netanyahu was meeting with President Obama at the White House to discuss recent tensions over Jewish expansion in East Jerusalem, which has been condemned by the Obama administration.

Last year, the 20-unit project on the site of the former Shepherd Hotel in the Palestinian-dominated neighborhood of Sheik Jarrah, was denounced by American officials who "pressured Israel to halt the project," reports the Los Angeles Times. "Israel refused, defending its right to build in all parts of Jerusalem."

A White House official told the LA Times that the administration still opposes the project and is seeking "clarification" about Tuesday's approval announcement from Israeli officials.

US-Israeli relations were rocked earlier this month when the Israeli government announced its approval of a 1600-unit project in another Palestinian neighborhood of East Jerusalem during Vice President Joe Biden's trip to Israel -- US officials interpreted the move as an "insult."

Moskowitz has aroused controversy for years for his land purchases in Arab neighborhoods in East Jerusalem, many of which were approved by Netanyahu during his previous tenure as prime minister. The two have a long relationship ever since Moskowitz played a crucial role in opening a research institute named after Netanyahu's brother, Yonatan, a legendary soldier who died during the famous Entebbe rescue operation in 1976.

And this isn't the first time that Moskowitz has created problems for Netanyahu -- back in 1997, the developer made headlines and caused turmoil within the Israeli government when he moved three Jewish families into a house he purchased in the Palestinian neighborhood of Ras al-Amud.

As reported by the Jewish Telegraphic Agency, Moskowitz was vilified by some in the Israeli media, with editorial cartoons depicting him as a "Daddy Warbucks" figure tossing matches into the tinderbox of Israeli-Palestinian relations. At rallies, Israeli peace activists unfurled banners asking, "How many wars have you fought in, Moskowitz?"

In addition, the JTA reported in 1997:

It was Moskowitz, after all, who is credited with pressing Netanyahu into opening the tunnel alongside the Temple Mount in Jerusalem last year. The move led to days of Palestinian rioting and the deaths of more than 70 people, including 15 Israelis.

Moskowitz, a gambling magnate, is a longtime supporter of conservative thinktanks such as the Hudson Institute, the American Enterprise Institute, and the Center for Security Policy. And he has powerful friends in American politics -- last August, onetime Republican presidential candidate Mike Huckabee attended a cocktail reception hosted by Moskowitz at the Shepherd Hotel. Earlier during his visit to Israel, Huckabee told reporters: "It concerns me when there are some in the United States who would want to tell Israel that it cannot allow people to live in their own country, wherever they want."

Though he rarely talks to the media, Moskowitz, who reportedly lost several dozen family members in the Holocaust, has sometimes spoken out to defend his activities and to voice his opposition to peace deals with the Palestinians. He once told the Jerusalem Post: "Under political pressure at home and abroad or in the hope of being remembered in the history books -- or simply out of sheer desperation -- prime ministers can take steps in the name of 'peace' that actually lead to war"

Moskowitz could not be reached for comment.