Needless to say, Israel's actions will be unwelcome in Washington, where the administration wants to forge Arab support over the Iraq crisis. "Settlements in East Jerusalem will spark strong anti-Israel and anti-American sentiment throughout the Arab world," says Hamad, "especially at a time when the U.S. may take action against Iraq." Jerusalem's status still needs to be negotiated under the Oslo Accord, and Israeli settlement in the Arab part of the city is a hot-button issue throughout the Muslim world -- Judaism's holiest city also contains Islam's second holiest site. The Israeli plan may leave Arafat dismayed and Washington alarmed, but Saddam Hussein ought to be smiling.
Benjamin Netanyahu probably won't force Yasser Arafat to quit the peace process, but he may be making Saddam Hussein's day. On Thursday, Israel began recruiting contractors for a controversial housing project in Arab East Jerusalem -- a move that previously led Arafat to break off ties with Israel. But this time, the Palestinian leader is unlikely to repeat that response. "Arafat may be angry but he won't withdraw from the process over this, because that may be exactly what Netanyahu wants," says TIME West Bank correspondent Jamil Hamad.