If the Independence Day speeches delivered this week by Foreign Minister Avigdor Lieberman and Knesset Speaker Reuven Rivlin were any indication, Jerusalem Day came early this year.

As they took the podium to vow that "united Jerusalem" would never be divided, both were no doubt aware that President Barack Obama's adviser, Dan Shapiro, was making his way to the region.

They could be sure that Shapiro, who heads the Middle East department at the White House, had not gone to the trouble of visiting Israel's eternal capital simply to drive another nail into the coffin of the peace process, or to say kaddish over Israel's relations with Washington.

Lieberman and Rivlin knew that Shapira and his colleague David Hale - deputy to U.S. special peace envoy George Mitchell and based permanently in Israel - would raise the subject of a building freeze in East Jerusalem in their meetings with the prime minister's staff.

Their strident declarations of a united Jerusalem and for development on both sides of the Green Line in the city point to concern - or perhaps an understanding - that the prime Benjamin Netanyahu has already caved in to pressure from Obama to freeze construction beyond the Green Line in the city.

When on Wednesday a senior U.S. official told the Wall Street Journal that Netanyahu had unequivocally rejected U.S. demands for a freeze in East Jerusalem, he conveniently provided the prime minister with a thick smokescreen to hide behind.

The alacrity with which the government confirmed such a 'damaging' report attests this - and we can now presume the crisis is over. As long as Jews aren't building in Sheikh Jarrakh or Ramat Shlomo, America couldn't care less was Israel says or doesn't say over a Jerusalem construction freeze.

Washington understands that Netanyahu can't afford to admit, not even obliquely, that he is treating Jerusalem like the West Bank settlements, where building has been banned until September. As far as the America's is concerned, Netanyahu can run and tell his friends that what goes for Tel Aviv goes for Jerusalem - as long Obama officials don't wake the next morning to newspaper reports that Israel has approved a new building program in the Holy City.

What Obama has demanded from Netanyahu is in essence a 'gentlemen's agreement' that Israel will not launch new building tenders in East Jerusalem as long as proximity talks with the Palestinians continue. Obama needs this commitment in order to convince Palestinian President Mahmoud Abbas that that he is not playing into the hands of Hamas.

A few months ago, Abbas told Ehud Barak that he was willing to forgo his demand for an total freeze in return for a discrete promise from the defense minister that building would halt. He is still waiting for an answer.

Yet while the Americans and Palestinians may be willing to take Netanyahu's domestic constraints into account on the issue of a construction freeze, there can be no doubting the role of Jerusalem in future final status talks. Since the Oslo Accords, by way of Camp David II, the Road Map and Annapolis, Jerusalem has always been at the heart of the dispute: Any divisions between Israel and the U.S. are mostly over procedure and timing. Netanyahu continues to demand prior commitments from the Palestinians on security and control of the Jordan Valley. The Americans (and, of course, the Palestinians) insist that talks deal immediately with all the core issues, including Jerusalem and refugees.

These negotiations over negotiations are concealing a growing skepticism on all sides over the chances of success in the proximity talks, and in the direct dialogue which is supposed to come after them.

As time passes and trust deteriorates, everyone is counting the days until August 2011 - when Palestinian Prime Minister Salam Fayyad is set unilaterally to declare a Palestinian state. In the meantime, both sides can be relied upon to play whatever tricks seem necessary to gain the upper hand.