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After a confrontation last month with the Obama administration, the Israeli government has quietly slowed controversial building projects in east Jerusalem. Prime Minister Benjamin Netanyahu is publicly claiming that there is no freeze in construction. But in Jerusalem there's been a halt to planning meetings on future settlement expansions. And Israeli settlers says their building projects have suddenly become mired in red tape.

Sheera Frenkel reports from Jerusalem.

(Soundbite of talking)

SHEERA FRENKEL: There's barely anyone in sight on the fourth floor of the Jerusalem municipal building. This is the planning and development division, where people come to get the construction projects approved. Where someone builds in Jerusalem and why is at the center of an ongoing diplomatic tussle between Israel and the Obama administration.

Israel's refusal to freeze settlement expansion in east Jerusalem has held up American efforts to restart peace negotiations. Palestinians say that settlements built in largely Arab east Jerusalem must be halted. They see the area as the capital of their future state. But Prime Minister Netanyahu has stated that Jerusalem will remain united and under Jewish control. He has publicly refused to bow to pressure to freeze all settlement expansion in east Jerusalem and throughout the West Bank.

Yitzhak Pindrus, a deputy mayor of Jerusalem, oversees building projects throughout the city. He says that all building projects, settlement or otherwise, are proceeding with business as usual.

Mr. YITZHAK PINDRUS (Deputy Mayor, Jerusalem): You could walk down over here, the fourth floor and see hundreds of workers working, giving out permits to people building. No freeze at all.

FRENKEL: But the plastic chairs in the waiting room are mostly empty. And the pro-settler groups, which�want to expand Jewish settlements in east Jerusalem, say that the municipality is putting up red tape and trying to delay controversial projects.

Mr. ARIEH KING (Founder, Israel Land Fund): (Through translator) The situation is this: every place where there is a Jewish interest in building, there are problems and delays. Things that should take days suddenly take weeks or months. So they don't call this a freeze, they call it a slowdown.

FRENKEL: That's Arieh King. He's the founder of the Israel Land Fund, which assists and facilitates Jews who want to move into the settlements. He's one of the most well known of the right wing activists expanding settlements. In a single hour he takes nine phone calls from people interested in helping him expand Jewish presence in east Jerusalem.

Mr. KING: (Through translator) There is a lot of support that we didn't get in the past. Both from non-Jews, who understand what we are doing, and from Jews who previously sat on the sidelines. There is money and there is a lot more money coming.

FRENKEL: More money means more projects. King says he has gotten adept at finding ways around the government efforts to limit settlement building.

Mr. KING: (Through translator) We currently have more than 400 housing units that we have gotten approval to build in east Jerusalem. To our great joy, the municipality doesn't know about it and neither does the government. They are currently marked as projects for Arabs, but actually it's our people.

FRENKEL: Deputy Mayor Pindrus says that he's aware of activists like King, who use loopholes and puppet buyers to expand settlements. But he says that there's nothing illegal about what King is doing.

Mr. PINDRUS: What if someone private goes and buys a home, what does anyone in the world, really, if we're talking in a real way, expect from the municipality? I know, politically it sounds great. There's nothing as a municipality or as a government that could be done about it.

FRENKEL: Despite the U.S. pressure and international scrutiny of Jewish settlements, King says it'll be his best year yet.

Mr. KING: (Through translator) 2009 was our most successful year in building in Jerusalem and 2010, as far as I see it, will be even more successful.

(Soundbite of phone ringing)

FRENKEL: He takes yet another phone call. He won't be stopped quietly, he says. If Israel wants him to stop building, they'll have to be loud about it.

For NPR News, I'm Sheera Frenkel in Jerusalem.

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