Last Tuesday’s announcement by the Israeli government that it will build 1,600 new housing units for Israelis in Palestinian East Jerusalem has unleashed an unparalleled furor. It was announced while Vice President Joe Biden was visiting Israel and the West Bank to promote the start of new indirect peace talks, which had just been announced a day earlier.

Some are calling it a slap in the face to Biden and the Obama administration. Others term it a wake-up call on the need for stronger U.S. action for peace. Still others say it is a moment of truth for Israeli Prime Minister Benjamin Netanyahu and his right-wing coalition.

Many commentators are noting Secretary of State Hillary Clinton’s sharp 43-minute phone call to Netanyahu on Friday, in which she said the announcement of the construction plan had sent a “deeply negative signal” that had damaged Israeli-American relations. Clinton told Netanyahu that the U.S. expected Israeli officials to take “specific actions” to show “they are committed to this relationship and to the peace process,” according to State Department spokesperson Philip Crowley, quoted in The New York Times.

“Such blunt language toward Israel is very rare from an American administration,” the Times article said.

Crowley declined to say what actions the U.S. was calling for, but other administration officials said the United States “hoped Israel would do something drastic enough to send a signal to the already reluctant Palestinian Authority that it was committed to the peace process,” according to the Times.

This morning, the “pro-Israel pro-peace” Jewish American group JStreet said it was delivering to the White House nearly 18,000 signatures in support of stronger U.S. leadership for a two-state resolution to the Israeli-Palestinian conflict.

The organization said the Israeli housing construction announcement for East Jerusalem was “a wake-up call” that “business-as-usual peace processing” is not working.

“An urgency of purpose suited to the danger of the moment is missing – here in the U.S., in Israel and in the American Jewish community,” JStreet said. “The time has come for strong action, not more talk.”

JStreet Executive Director Jeremy Ben-Ami said the crisis presented an opportunity for the White House to press for resolving the core issues, in particular the need to define a border between Israel and the future Palestinian state.

“Bold American leadership is needed now to turn this crisis into a real opportunity to end the Israeli-Palestinian conflict, which is a fundamental American national security interest,” Ben-Ami said in a March 15 statement. Such efforts, he said, are also in Israel’s interests, and would find “vast support among American Jews.”

East Jerusalem is on the Palestinian side of the pre-1967 Green Line dividing Israel and Palestinian territory. One of the Palestinians’ central demands is that East Jerusalem will be the capital of the Palestinian state.

Israeli housing construction in East Jerusalem, along with evictions of Palestinian residents, has been an ongoing issue. Before the latest crisis, on March 6, several thousand Israelis and Palestinians demonstrated in East Jerusalem against the eviction of Palestinians from their homes to accommodate Jewish settlers.

The Israeli government unilaterally “annexed” East Jerusalem following the 1967 war, and it insists that all of Jerusalem is part of Israel, therefore not covered by any settlement freeze.

But the uproar unleashed by last week’s move may force Netanyahu to back off from that position.

“I think that Netanyahu is at a moment of truth,” Gideon Doron, a political science professor at Tel Aviv University, told the Christian Science Monitor. “He has to choose whether or not he wants to ignite the forces for peace, or whether he’ll go against the U.S. and play for time. He can’t do that. It’s suicide.”

This morning, the Israeli news site YNet News reported that Israel would implement a “de-facto” construction freeze in Jerusalem.

YNet quoted a senior Israeli government source as saying, “The price for the American insult will be a de-facto construction freeze across greater Jerusalem. There will be no other choice, due to the government’s stupidity.”

According to this report, sources in the Israeli cabinet say the U.S. is demanding cancellation of the construction plan.

“The necessary gestures will halt construction work in all settlements,” the YNet article said. “Tenders that were in the works will be put on hold, even if those were part of previously approved projects. In addition, … Netanyahu will have to extend building restrictions in settlement blocks once the cabinet decision expires in September.”

The Israeli prime minister is not expected to make a statement officially calling off the construction, but, the government source said, “the tense reality will force him to quietly enforce the construction freeze. Furthermore, this freeze will include all construction in the West Bank today,” and probably into the future.

Other possible Israeli “gestures” include agreeing to talk about “final status” issues during the indirect talks, prisoner releases and easing restrictions in the occupied territories.

Photo: Palestinian workers on a construction site in the East Jerusalem neighborhood that Israel calls Ramat Shlomo, where the Israeli plan would add 1,600 housing units for Israelis. (AP /Dan Balilty)