The US has long seen itself as playing a crucial role in bringing about Israeli-Palestinian peace.

Yet, US policy toward Israeli actions in and around Jerusalem has shifted over time.

Initially, the Johnson administration took a strong line, with UN representative Arthur Goldberg explaining a week after the 1967 war ended that "the United States does not accept or recognise these measures as altering the status of Jerusalem."

Ironically, it was the administration of Jimmy Carter, who today says Israeli policies in Jerusalem are leading to apartheid, which first saw a significant change in US rhetoric.

It was his administration which moved away from calling on Israel to maintain the status quo toward recognising the desirability of maintaining Jerusalem "undivided" in any peace agreement.

This view was shared by the Reagan administration. In the words of President Reagan, Jerusalem’s final status "should be decided through negotiations."

By the time Bill Clinton, the former US president, took office in 1993, the US government no longer offered more than mild criticism for increasing Israeli settlement activities across the Eastern part of the city and the surrounding West Bank lands.

Most crucially, Clinton refused to allow the UN Security Council to address settlements in Jerusalem or elsewhere, arguing that what was once understood by the US, and the world at large, to be a clear violation of international law, should be left to bilateral Israeli-Palestinian negotiations.

Obama's bind

The official US imprimatur for Israel's policies came during the George Bush presidency, when he wrote in a 2004 letter to Ariel Sharon, the then-prime minister, that: "In light of new realities on the ground, including already existing major Israeli populations centres, it is unrealistic to expect that the outcome of final status negotiations will be a full and complete return to the armistice lines of 1949, and all previous efforts to negotiate a two-state solution have reached the same conclusion."

It is not known what documentation or arguments led Bush to assume that all previous negotiations led inexorably to the understanding that Israel's constantly increasing control over East Jerusalem and the West Bank would be accepted as a fait accompli by Palestinians.

This is more bewildering given that the settlement system in the West Bank, of which the Jerusalem region is the heart, makes the creation of a Palestinian state geographically, politically, and economically impossible to achieve.

Nevertheless, Bush's words have placed Obama in something of a bind.

During the campaign, the then-candidate Obama caused a stir when, at the annual convention of the American Israel Public Affairs Committee lobby, he argued that "Jerusalem will remain the capital of Israel, and it must remain undivided."

Defying Obama

After intense criticism from Palestinians and others, advisers clarified his comments, explaining that "Jerusalem is a final status issue, which means it has to be negotiated between the two parties" while ensuring that the city is "not going to be divided by barbed wire and checkpoints as it was in 1948-1967."

The reality, however, is that the while the Israeli-expanded city is not divided by barbed wire and check points - although Palestinian residents face continual monitoring and harassment - Jerusalem itself is effectively separated by barbed wire, huge walls and massive checkpoints from the rest of the West Bank.

Obama has tried to stiffen his position on Jerusalem by criticising Israel's newest plans to build in Sheikh Jarrah, but Binyamin Netanyahu, the Israeli prime minister, has so far openly defied Obama's position without facing any consequences.

And, by challenging Obama directly on an issue where there is an overwhelming international consensus, the Israeli leader is clearly hoping to stall the larger peace process for the remainder of both men's terms in office.

It is not clear who will blink first.

But it is certain that unless the walls come down and the checkpoints are dismantled in Jerusalem and across the West Bank and Gaza, the dream of an Israeli-Palestinian peace will remain as elusive for Obama as it was for his predecessors.