Rejecting a US demand to halt settlement construction in occupied East Jerusalem, Israel's prime minister asserted that Jews have a sovereign right to live and own property in all parts of the city. Haaretz reported: "The United States has told Israel it must halt an East Jerusalem construction project in accordance with the Obama administration's demands for a complete freeze on settlement building, Israeli radio stations reported on Sunday. "The State Department summoned Israeli Ambassador Michael Oren over the weekend to advise him that the project developed by American millionaire Irving Moskowitz should not go ahead, according to both Israel Radio and Army Radio. "Moskowitz, an influential supporter of Israeli settlement in East Jerusalem, purchased the Shepherd Hotel in 1985 and plans to tear it down and build housing units in its place. The hotel is located near a government compound that includes several government ministries and the national police headquarters. The approval, granted by the Jerusalem municipality earlier this month, allows for the construction of 20 apartments plus a three-level underground parking lot. "In response, Oren told the State Department that Israeli construction in East Jerusalem was no different than in any other part of the country." Writing for The National, Omar Karmi noted: "Washington's public challenge to Israel on settlement construction in East Jerusalem has set the two sides firmly at opposite poles, and analysts describe the issue as a crucial test of the Obama administration's intentions vis-à-vis the Palestinian-Israeli conflict." The New York Times, reporting on the Israeli prime minister's response said: "Prime Minister Benjamin Netanyahu rejected Sunday an American call to hold off on a planned Jewish housing development in East Jerusalem, saying Israel's sovereignty over the disputed city could not be challenged... " 'I would like to re-emphasise that united Jerusalem is the capital of the Jewish people and of the State of Israel,' the prime minister said. 'Our sovereignty over it cannot be challenged; this means - inter alia - that residents of Jerusalem may purchase apartments in all parts of the city.' "Israeli officials, speaking on condition of anonymity because of the delicacy of the matter, said the Netanyahu government had gone public with the issue to try to pre-empt further American efforts to stop Jewish building in East Jerusalem. Mr Netanyahu noted in his statement that there were [Israeli] Arabs living in the predominantly Jewish western part of the city, adding, 'We cannot accept the idea that Jews will not have the right to live and purchase in all parts of Jerusalem.' " Islam Online said: "Some Israeli lawmakers opened fire at the Netanyahu government over the controversial building. " 'Construction in the heart of Arab neighbourhoods is not an Israeli interest,' insists Maretz party leader Haim Oron. " '(It is) rather a real-estate interest and the interest of those who wish to set the area on fire. " 'Anyone deluding himself to the effect that East Jerusalem is not part of the territories and Israel can continue to act in the West Bank and East Jerusalem as if there is no international community, receives a slap from time to time.' "Chief Palestinian negotiator Saeb Erekat also lashed out at the Israeli scheme. " 'If the Israeli prime minister continues with settlement activities, he will undermine efforts to revive the peace process,' he warned. " '(He must realise) that settlements and peace are two parallels that do not go together.' " In The Guardian, Chris McGreal described how Mr Moskowitz acquired the millions of dollars he has devoted to supporting the vanguard of the Jewish settler movement. "For the winning punters chancing their luck at Hawaiian Gardens' charity bingo hall in the heart of one of California's poorest towns, the big prize is $500. The losers walk away with little more than an assurance that their dollars are destined for a good cause. "But the real winners and losers live many thousands of miles away, where the profits from the nightly ritual of numbers-calling fund what critics describe as a form of ethnic cleansing by extremist organisations. "Each dollar spent on bingo by the mostly Latino residents of Hawaiian Gardens, on the outskirts of Los Angeles, helps fund Jewish settlements on Palestinian land in some of the most sensitive areas of occupied East Jerusalem, particularly the Muslim quarter of the old city, and West Bank towns such as Hebron where the Israeli military has forced Arabs out of their properties in their thousands. "Over the past 20 years, the bingo hall has funnelled tens of millions of dollars in to what its opponents - including rabbis serving the Hawaiian Gardens area - describe as an ideologically-driven strategy to grab land for Israel, as well as contributing to influential American groups and thinktanks backing Israel's more hawkish governments." In the 1990's, Mr Moskowitz's hostility towards the peace process and his close ties to Mr Netanyahu during his first term as prime minister were widely reported. In the Jewish Telegraphic Agency in Sept 1997, Matthew Dorf wrote: "In a 1996 interview with the Los Angeles Times, Moskowitz minced no words when he talked about Israeli politics, calling the peace process 'a slide toward concessions, surrender and Israeli suicide.' "I'm doing the 'natural thing for a Jew,' he said, trying to 'save our nation.' "The year before, he compared slain Israeli Prime Minister Yitzhak Rabin to Britain's Neville Chamberlain, who sought to appease the Nazis. " 'I was 10 years old at the time and still vividly remember the profound sadness that enveloped our home in the wake of the Munich signing. There was an atmosphere of mourning for the tragedy we knew would follow, since belligerent dictators can never be truly appeased,' he told the Jerusalem Post two years ago. " 'Under political pressure at home and abroad or in the hope of being remembered in the history books - or simply out of sheer desperation - prime ministers can take steps in the name of "peace" that actually lead to war.' "More recently Moskowitz has defended his right to build in an Arab neighborhood of Jerusalem. " 'If the peace process is incapable of digesting the presence of 50 Jewish families 860 yards from the Western Wall and barely a mile from the King David Hotel, then its fragility is indeed beyond repair," Moskowitz wrote in a letter to the editor of The Washington Post last week."