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The unspoken message that the Obama administration appeared to send Israeli Prime Minister Benjamin Netanyahu

last week is this: Stop behaving like an ungrateful friend.

Ever since Netanyahu’s government blindsided Vice President Biden during his recent visit to the Jewish state with an announcement that it will build 1,600 housing units in East Jerusalem, the Obama administration has been smarting.

And for good reason.

Of all the hurdles to an enduring peace deal between Israel and the Palestinians, the fate of Jerusalem— which both claim as their capital — is the most daunting. Every time Israel breaks ground on more housing there, the peace lamps flicker.

Reeling from Israel’s announcement, the Obama administration urged Netanyahu to rescind the decision. In a phone call, Secretary of State Hillary Clinton told the prime minister that the new construction was “a deeply negative signal” about Israel’s relationship with the United States. The Israeli government “needed to demonstrate not just through words but through specific actions” its commitment to that relationship and the peace process, Clinton said, according to State Department spokesman P. J. Crowley.

But in a speech last week in Washington to the American Israel Public Affairs Committee, Netanyahu thumbed his nose at these concerns. “Jerusalem is not a settlement; it’s our capital,” he proclaimed.

Israel’s benefactor

The United States is Israel’s oldest and closest friend. And since its creation in 1948, Israel has been the largest cumulative recipient of American foreign aid. In addition to now receiving nearly $3 billion annually in grants from this country, Israel has gotten billions of dollars worth of loan guarantees since 1972 to help build housing and shore up its economy.

While Israel is forbidden from using any of this money to construct housing in its occupied territory, the largesse frees Israel to use other parts of its budget to fund such projects. Not to mention that without U.S. military assistance, Israel would struggle to fend off its enemies.

A costly commitment

Our support of Israel is costly in non-monetary ways, too.

“The enduring hostilities between Israel and some of its neighbors present distinct challenges to our ability to advance our interests” in that part of the world, Gen. David Petraeus, the commander of U.S. forces in Afghanistan and Iraq, told the Senate Armed Services Committee this month. “Arab anger over the Palestinian question” hurts this country’s relationship with other governments in the region and “weakens the legitimacy” of moderate Arab leaders, he said.

And while unemployment in Israel dropped to 7.4% in the last quarter of 2009, joblessness during that period in the U.S. hovered around 10%.

The investment of treasure, and as Petraeus hinted, perhaps U.S. blood, on behalf of Israel should evoke deep gratitude. Instead, Netanyahu’s government takes a go-it-alone approach when it serves Israel’s interest — the rest of the world be damned.

The United States is right to champion Israel’s right to exist, of course, and to provide an umbrella of protection to help ensure the Jewish state’s survival. But the Netanyahu government strains this longstanding friendship when it pursues a course of action that unnecessarily inflames passions in the Arab world and weakens the ability of moderate Arab leaders to talk peace.

Israel is coming under growing international pressure following its approval of new housing for Israelis in occupied East Jerusalem.

Britain, France, the EU and the Arab League have all added their protests against the decision.

The housing row has overshadowed a visit by US Vice-President Joe Biden which is meant to promote a new round of US-led negotiations.

He has condemned the move, saying it undermined trust in the peace process.

Israel and the Palestinians had agreed to hold indirect “proximity talks” in a bid to restart the process, which has been stalled for 17 months.

But earlier this week it approved 1,600 new homes for ultra-Orthodox Jews in East Jerusalem.

The international community considers East Jerusalem occupied territory and building on occupied land is illegal under international law.

Israel regards East Jerusalem – which it annexed in 1967 – as its territory, but Palestinians want it as the capital of their future state.

‘Ill-timed’

UK Foreign Secretary David Miliband described the Israeli move as “a bad decision at the wrong time”.

“It will give strength to those who argue that Israel is not serious about peace,” he said.

“Along with our EU partners, I condemn it as certain to undermine the mutual confidence we need.”

French Foreign Ministry spokesman Bernard Valero said the decision was “completely ill-timed”.

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Israel under pressure over East Jerusalem homes