Israel has started construction on a new set of housing units in a Jerusalem suburb, and it is causing an uproar from Ramallah to Washington.
New housing units weren't an issue a few months ago when Palestinian President Mahmoud Abbas met regularly with Israel's former Prime Minister Ehud Olmert.
Now that Benjamin Netanyahu is prime minister, however, Abbas has refused to talk with the Israeli leader until all Jewish building in the West Bank and east Jerusalem stops.
President Obama told Fox News he thinks additional settlement building does not contribute to Israel's security.
"I think it makes it harder for them to make peace with their neighbors," he said. "I think it embitters the Palestinians in a way that could end up being very dangerous."
"We are working to re-launch negotiations and we believe that these actions make it more difficult for our efforts to succeed," said State Department Spokesman Ian Kelly.
Most Israelis, including Foreign Minister Avigdor Lieberman, don't consider suburbs like Gilo to be settlements.
"I think Gilo is part of the state of Israel," Lieberman said. "It is an integral part of Jerusalem, exactly like Tel Aviv and Herzliya. We have no intention of interfering with plans to build. Everything will run its normal course."
Israel's government received some support from former Alaska Gov. Sarah Palin, who told Barbara Walters in an ABC interview that Jews should have the right to build there.
"Because that population of Israel is going to grow--more and more Jewish people will be flocking to Israel in the days and weeks and months ahead," said Palin. "And I don't think the Obama Administration has any right to tell Israel that the Jewish settlements cannot expand."
The city of Jerusalem plans to continue building in Gilo, with Mayor Nir Barkat defiantly telling the world he won't prevent Jews or Arabs from building in the city.
A noted left-wing Israeli politician said Netanyahu will soon declare a 10-month freeze in West Bank settlement building.
He was quoted by Army radio as saying the freeze would not include Jerusalem, and would be rejected by the Palestinians.
*Originally published November 19, 2009.