How cross is the superpower?

The very public row over the Israeli Government's humiliation of US vice-president Joe Biden has led to excited speculation that the US Government might actually defy Israel this time. Don't hold your breath.

The White House has not actually prevailed in a policy dispute with Israel since 1991, when George Bush Sen's government denied loan guarantees to Israel until it stopped expanding Jewish settlements in the occupied Palestinian territories. Mr Bush believes his action cost him the 1992 election, and the settlements were soon growing again.

Bill Clinton took umbrage when Israeli Prime Minister Benjamin Bibi Netanyahu lectured and hectored him during their first meeting in 1997. "Who's the superpower here?" Mr Clinton asked. But he never dared to put real pressure on Mr Netanyahu, even when he disapproved of his policies - which he generally did.

Mr Biden's visit to Israel last week was meant to bestow Washington's blessing on "indirect" talks between the Israeli Government and the Palestinian Authority: that is, "proximity" talks in which the Palestinians and the Israelis, in the same building, would each talk to American mediators but not directly to each other. It was a clumsy arrangement, but the best the White House could do.

Mr Netanyahu became Israel's prime minister again a month after Barack Obama took office. Mr Obama had promised to restart Middle East peace negotiations, but Mr Netanyahu led a right-wing coalition that would collapse if he made any major concessions about Jewish settlements in West Bank. It was never going to be a comfortable relationship.

Mr Obama had already got Palestinian leader Mahmoud Abbas to agree to new peace talks by promising him that Israel would stop building new Jewish settlements in the occupied territories.

That was a bottom line for the Palestinians, who had watched the Jewish population of the West Bank double to almost 500,000 people in more than 100 settlements since the Oslo Accords (the start of the "peace process") were signed in 1993.

So Mr Obama asked Mr Netanyahu to "freeze" further construction in the settlements. Mr Netanyahu ignored his request for four months, and then offered a "temporary" 10-month halt to new construction in the West Bank but work would continue on 3000 new housing units already under construction and on infrastructure projects.

This was a far cry from what Mr Obama had requested, but he acknowledged defeat and switched his efforts to forcing the Palestinians to accept less than half a loaf.

Mr Abbas could not submit to this rebuff without committing political suicide, and so the direct peace talks Mr Obama had envisaged were downgraded to "proximity" talks.

This arrangement suited Mr Netanyahu, whose main goal is to avoid a US-backed peace proposal that involves a halt to the current rapid growth of Jewish settlements in the Palestinian occupied territories, or even a retreat from them.

So he did not need the political ambush that wrecked Mr Biden's visit last week, and he probably did not plan it. While Mr Biden was still in Israel, the interior ministry announced a decision by a Jerusalem district planning committee to build 1600 new homes for Jews in occupied East Jerusalem.

It made both Mr Abbas and Mr Biden look like fools - and even if Mr Netanyahu did not intend the insult, he refused to cancel the plan. He just apologised for the poor timing.

Vice-president Biden was very cross: "I condemn the decision by the government of Israel to advance planning for new housing units in East Jerusalem. The announcement ... is precisely the kind of step that undermines the trust we need right now."

US Secretary of State Hillary Clinton said the Israeli move was "an insult to the US", and told Mr Netanyahu by phone that it was "a deeply negative signal" about the US-Israeli relationship.

"This was an affront, it was an insult but most importantly it undermined this very fragile effort to bring peace to that region," said David Axelrod, one of Mr Obama's closest aides.

"For this announcement to come at that time was very destructive."