"Their celebration is our misery," said Emad Saleh Dari, squatting in the rubble of his home in a northeastern suburb of Jerusalem.
It was April 2002, on Israel's Independence Day. And for the Israeli Arabs of Isawiya, it had dawned with a harsh, cold light.
But at a time of relentless suicide bombings that took dozens of Israeli lives – and retaliatory attacks on Palestinian towns – there was little celebration in either quarter.
Dari, a cook in a Jerusalem café popular with the Israeli police, spent the day huddled with his pregnant wife and two small daughters in the remains of his living room. Israeli forces, searching for a suspected terrorist, had evacuated the family in the middle of the night and blasted away part of the concrete block house that had cost him his life savings.
Meanwhile across the divided city, shivering Jewish crowds gathered in Liberty Park trying to glean some cheer from the band's determinedly upbeat birthday tribute. But their drawn faces spoke louder than the music: "the Palestinians say they feel like prisoners," said one man. "But we're all in this trap together. It's just that none of us can find a way out."
That was eight years in the past, and the Palestinian intifada is long over, while Israel is preparing for its next anniversary in relative peace and prosperity.
But after a week of clashes in East Jerusalem and the West Bank, and the halting of the newly-launched peace process, it could also be the future that no one wants. Not Israelis, not Palestinians, and not Israel's greatest ally, the United States.
President Barack Obama's attempt to jump start talks between Israelis and Palestinians has crashed on takeoff, after Israel's announcement of a plan to build 1,600 new homes for Jews near East Jerusalem, on territory it annexed after a 1967 war – and insists is part of its sovereign capital.
Obama had called for a freeze on building. And the news, aired during a visit by Israel-friendly vice-president Joe Biden, had the effect of collapsing near-term prospects for peace, shaking the U.S.-Israel relationship in the process. It angered Washington and sparked demonstrations as well as a Palestinian pullout from the indirect talks, mediated by U.S. envoy George Mitchell.
But Israel's right to expand its settlements into the Palestinian territories goes to the heart of the peace process, and increasingly, of Israel's "special relationship" with Washington: A 62-year alliance of mutual benefit that spans security, economic interests and shared values in a rough neighborhood that has been hostile to both.
In the past, disputes have occasionally spiralled into confrontations, and Israel has sometimes backed down. But often it has emerged the winner in contests that Washington has not fought with much vigour. And the unwritten rule has been to "keep it in the family," putting a smiley face on the pubic relationship.
But under the Obama administration, the smiles are strained, in spite of the president's attempts to lower tensions by declaring that "friends are going to disagree sometimes."
Obama is encouraged by a shift in Washington's political landscape. And one of the game-changers is a new opposition to influential pro-Israel lobby groups by more moderate Jews who believe the road to peace is not through ever-expanding settlements. They are lending support to Obama for his standfast policy on the settlement freeze, which they see as the last, best hope for saving the two-state solution that would put Israel side by side with a new Palestinian state.
"If the game doesn't change, the alternative is the status quo which is a rapidly deteriorating situation," says Amy Spitalnik, a spokesperson for J Street, a two-year-old lobby group that has made large strides on the American political scene.
"If we don't see real progress in the peace process there won't be an Israel to fight for. It's not going to be the Israel we know and love – a Jewish democratic homeland."
J Street supporters fear that without two states that have internationally recognized borders, there could be more violence, international condemnation of Israel's settlement expansion and barriers separating Jewish from Palestinian areas, and eventually, a Palestinian population that supercedes Israel's as numbers increase.
"We've really been pounding the pavement on Capitol Hill," says Spitalnik. In the past week, 100 members were invited to the White House, and delivered an 18,000-signature petition calling for "hard action" to ensure peace in the Middle East.
"In the first 20 hours of our campaign there were 20,000 messages sent to Congress," she added. "That means every second or so there are folks hitting the send button and telling their congressmen and senators they support Obama's strong leadership on this issue."
The impact has not gone unnoticed. Stephen Walt, co-author of a controversial book on the U.S. Israel lobby, noted J Street's new influence, and suggested in a Foreign Policy blog, "there is no reason why groups like AIPAC cannot evolve too, and begin to use their considerable political acumen in the service of a more far-sighted approach."
So far the plea has fallen on deaf ears among the Israeli government's fiercest supporters.
AIPAC, the America Israel Public Affairs Committee, said that Obama's statements on Israel were of "serious concern," and said it was the U.S. that must "take immediate steps to defuse the tension" with the Israeli government.
With numbers still on its side – polls say at least 60 per cent of Americans have more sympathy for Israelis than Palestinians, while many politicians are loathe to run afoul of the powerful lobby group – AIPAC can still out-shout J Street at the Washington addresses that count.
But although it has wavered on Middle East policy, the Obama administration is not listening as intently as its predecessors. It shows every sign of forging ahead with demands ranging from freezing Israel's building plans to bringing to the table thorny "core issues" such as the status of Jerusalem – which Israelis and Palestinians both claim as future capitals.
"If you're Obama you can do one of three things," says Daniel Levy of the New America Foundation, a member of the Israeli delegation at the 2001 Taba peace talks. "You can escalate the rhetoric, put plans on the table without consulting Israel first, or create consequences (for not complying).
"We're still in the rhetoric stage."
By taking a firm stand, Obama has made it more difficult for the world's most powerful country to back down. If he does, he risks jibes that the Israeli tail is wagging the big American dog.
But in Israel, Prime Minister Binyamin Netanyahu is equally feeling the diplomatic squeeze.
"He's desperate to cool it without seeming to give way to American pressure," said Mideast expert Lawrence Freedman of University of London, author of A Choice of Enemies. "His whole political career is based on settlements. He can't just disavow it all. He's also got to worry about keeping the support of his coalition."
Some believe Obama's real aim is a kind of political genetic engineering – to force Netanyahu to replace his alliance with extreme right parties with a more moderate coalition that would be amenable to compromise with the Palestinians.
"Obama knows that this sort of stable, centrist coalition is the key to success," writes Jeffrey Goldberg in the Atlantic. "It's clear to everyone ... that no progress will be made on any front if Avigdor Lieberman's far-right party, Yisrael Beiteinu, and Eli Yishai's fundamentalist Shas Party, remain in Netanyahu's surpassingly fragile coalition."
Beyond that, Goldberg suggests, Obama is quietly promoting the more moderate Tzipi Livni's campaign for prime minister, or at least the inclusion of her Kadima party in the reconfigured coalition.
Netanyahu, however, may resist any such move. He trailed Livni in the February 2009 election, but formed a government when her coalition collapsed. His own was formed after days of bitter backroom bargaining.
He has also thrown down the gauntlet to Washington with a declaration that "no government of Israel for the last 40 years has agreed to place restrictions on building in Jerusalem." A clear signal to his right-wing allies, and statement of intent.
"Though Obama's insistence on a settlement freeze to help restart negotiations was legitimate, he went a step too far by including building in East Jerusalem." says Yossi Klein Halevi of Jerusalem's Shalem Center, in The New Republic. "No government, let alone one headed by the Likud (party) could possibly agree to a freeze there."
But without a freeze there may be no thaw between the six-decade allies. And Israel and the U.S. – as well as the Palestinians – can look forward to a long winter of discontent.
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