Tensions have eased since the recent clash between the Obama administration and Israel over new expansion plans in East Jerusalem, but the controversy is far from resolved. Unless Prime Minister Benjamin Netanyahu finds a better way to tamp down the expansionist tendencies of his coalition members, a rocky future awaits U.S.-Israeli relations.
Final status issues

Israeli and Palestinian leaders were able to conclude a landmark interim peace deal in 1993 by agreeing to delay the most contentious issues dividing the two sides. Nearly 17 years later, these "final status" issues remain unresolved:

•Jerusalem: the possibility that both sides could share it as their respective capitals

•Settlements: which ones should be dismantled or absorbed into Israel proper

•Borders: establishment of distinct, sovereign and secure borders

•Refugees: whether Palestinian refugees should have a "right of return" or receive displacement compensation

Netanyahu appeared to have been taken by surprise when a ministry run by one of his coalition partners announced construction approval for 1,600 new housing units in East Jerusalem, captured by Israel in 1967. The announcement came just as Vice President Joe Biden had arrived to inaugurate renewed talks between Israelis and Palestinians. The peace process is once again smoldering.

Biden was furious. The Obama administration issued a strong rebuke to Israel. But rather than try to mend fences or hint at contrition, Netanyahu flew to Washington for a March 22 speech noteworthy for its lack of restraint. "Jerusalem is not a settlement. It is our capital," he declared defiantly.

Netanyahu is no neophyte. He knows well that four major "final status" issues remain to be resolved before any lasting peace deal can be reached with the Palestinians, and the status of Jerusalem is one of them. Announcing expansion of Jewish housing in East Jerusalem just as the talks were starting was a provocation unworthy of any serious peace partner.

Worse can be said of the Palestinians, whose extremists in Gaza shattered earlier peace prospects with unrelenting rocket attacks and suicide bombings against Israelis. No one can take Palestinian leaders seriously – especially not their Israeli counterparts – if the leadership can't exercise minimal control over their population.

Israel's action by no means compares with the violence Palestinians have perpetrated. Still, the Obama administration was justified in expecting a quick and heartfelt repudiation from Netanyahu. You don't treat a visiting American vice president that way.

"Pratfalls happen. But it was also the responsibility of the prime minister to demonstrate more clearly than he did that this was unacceptable to him," Deputy Secretary of State James Steinberg told us last week. "We can disagree about the question of housing in Jerusalem. We know their position. But ... just because they insist on the right to build in Jerusalem doesn't mean they have to build."

There's a clear reason why, despite Israel's claim of Jerusalem as its capital, that no country maintains an embassy there. East Jerusalem is disputed territory and a focal point of the peace efforts.

Instead of creating a space for those efforts to advance, the Israelis shut the door and angered their staunchest ally in the process. Testing American patience is a bad strategy for a country that can use all the friends it can get.