WASHINGTON – Two years ago, at the annual AIPAC policy conference in Washington, an exuberant Barack Obama, who had just clinched the Democratic presidential nomination, declared to warm applause from the gathered thousands of American pro-Israel activists: “Jerusalem will remain the capital of Israel, and it must remain undivided.”Immediately afterwards, however, a campaign adviser “clarified” to The Jerusalem Post that Obama still considered the fate of Jerusalem to be “a final-status issue, which means it has to be negotiated between the two parties.”When Obama had spoken of an undivided city remaining the capital of Israel, this adviser elaborated, he had meant only that “it’s not going to be divided by barbed wire and checkpoints as it was in 1948-1967,” and he was not ruling out that it might one day also serve as the capital of a Palestinian state. Flash forward two years, and it is plain now for all to see that Obama’s presidential thinking reflects what his adviser said on background rather than what the candidate, with such constructive ambiguity, declared from the AIPAC podium.For a year, the US and Israel have been embroiled in a row over the president’s demand that the Netanyahu government halt all building for Jews over the pre-1967 Green Line, emphatically including Jerusalem. And for a year Binyamin Netanyahu has resisted him.By Sunday, as AIPAC began its 2010 policy conference, that dispute had exploded into the worst crisis in US-Israel ties since George H.W. Bush and Yitzhak Shamir went head-to-head over settlement-building 20 years ago, if not longer. Israel’s enemies are delighting in the rift, identifying a weakening of Washington-Jerusalem ties to be exploited in their abiding battle to eliminate Israel.Meanwhile, Israel’s friends, including some of its most passionate American Jewish supporters, are being torn between their dismay at Netanyahu’s lazy incompetence for failing to prevent a low-level committee approving new building in east Jerusalem during Vice President Joe Biden’s visit, and their outrage at the cold re-escalation of the dispute nine days ago by Obama, after Biden had been mollified. So concerned was the administration to ensure that word got out of Secretary State Hillary Clinton’s bitter phone call to Netanyahu on Friday, March 12, that key State Department reporters were telephoned ahead of their daily briefing so that they could break the nasty news worldwide before Israel went into Shabbat hibernation.THE TOXIC argument is a function of three factors, one personal, one substantial, and one downright incendiary, that will have to be resolved for this most vital of relationships, certainly for Israel, to be healed.Personally, it can scarcely be denied now that the key protagonists, Obama and Netanyahu, are suffering what might most politely be described as an acute trust-deficit. Obama feels Netanyahu has twice blind-sided him over Jerusalem – the first occasion being when new building was announced in Gilo after the pair met four months ago – and will wonder over the veracity of anything the prime minister tells him for a long time to come.Netanyahu, if he foolishly succumbs to the paranoia of some around him, may convince himself that the president is “out to get him” – to bring down his government. More reasonably, he feels shocked by the revival of the Ramat Shlomo affair after he thought he had sorted it out with Biden, and especially by the nature of the administration’s public criticism, which featured accusations verging on betrayal.This personal breach – ironically exacerbated in those large parts of the Israeli print media that are deeply hostile to the prime minister for reasons relating less to national concerns than to their own circulation wars – will take time to heal. The two leaders will likely never interact as well as they should in the interest of both countries, but they can strive to avoid a similar breakdown, and there are other strong personal relationships between senior figures on both sides that can help compensate for the strains at the very top.The substantial policy issue is, of course, Jerusalem, where the administration has consistently pushed too far in demanding a freeze from a government that won’t deliver it, in the process actually distancing Mahmoud Abbas from peace talks. How can he, after all, consent to a dialogue with an Israel that is not even satisfying its ally on so basic an issue?A solution here first requires a more accurate presentation of the dispute than has featured in much of the international coverage of the last couple of weeks.Ramat Shlomo is not a settlement, and it is not constructed in a Palestinian neighborhood. Israel’s policy, as summed up by President Shimon Peres at the weekend, is generally to build in Jewish, not Arab, Jerusalem neighborhoods over the Green Line – neighborhoods, such as Ramat Shlomo, that it has no intention of relinquishing to Palestinian control; neighborhoods that Abbas has not anticipated coming under Palestinian control. With that as a guideline, and with proper, non-inflated communication about such construction between Washington and Jerusalem, the matter can be de-emphasized – as Biden had indicated he was ready to see happen, before the flames were fanned afresh.The third and final area of dispute, however, is by far the most significant and problematic. It concerns the way in which the personal Obama-Netanyahu animus and the row over Jerusalem have been conflated with Centcom commander Gen. David Petraeus’s testimony last week to the effect that American troops are being placed in greater danger on the front lines because of “Arab anger over the Palestinian question” and the sense of “US favoritism for Israel.”The bottom line here is that, yes, Israel’s Arab enemies don’t like America for supporting Israel. They also don’t like America for intervening in Iraq and Afghanistan.Whisper it softly, but Islamic extremists don’t like Israeli Jews for being Jewish. And they don’t like American Christians for being Christian.Is the US going to be deterred from supporting Israel because that support irritates our mutual enemies? Is the Obama administration prepared to weaken Israel, and by how much, as it seeks relentlessly to engage with some of these enemies – as it seeks, through a thus-far spurned effort at reconciliation, to defuse the threat they pose to the very democracy and freedom for which Israel stands?Those are the most critical questions at the heart of the currentAmerican-Israeli tensions. And while all sides will doubtless maketheir best efforts at cosmetic surgery to cover up the strains at theAIPAC event this week, and may prefer to try to slide past thecontroversy, Netanyahu, for his part, and Clinton, who addresses theconference Monday, and other administration officials, for theirs,could do a lot to truly revitalize the relationship by addressing ithead-on, and positively.Because for all of Washington’sassurances that the relationship is “unshakeable” and “unbreakable,” itis most certainly trembling right now. And forces that are hostile toboth the US and Israel are salivating at the prospect of a realbreach.