Renco Group Inc. founder Ira Rennert and bingo entrepreneur Irving Moskowitz are among US donors who have donated $25.4 million over five years for the building of Jewish homes in Arab parts of Jerusalem - the same areas in which President Barack Obama is pressing Israel to stop such construction. The American contributions, detailed in Internal Revenue Service records, have gone to organizations such as Ateret Cohanim. The group says it bought at least 45 properties, mostly in the Muslim Quarter, to advance its goal of a Jewish majority in the mostly Arab Old City. The donations have also helped fund plans to build Jewish homes on the Shepherd Hotel site in the Sheikh Jarrah neighborhood. The US State Department two weeks ago asked Israel to halt the project, which has been condemned as a threat to Israeli-Palestinian peace prospects by the French government, the European Union and Palestinian Authority President Mahmoud Abbas. Plans to build homes for Jews in that part of the city are "the type of issue that should be subject to permanent-status negotiations," State Department spokesman P.J. Crowley told reporters on July 20. in response to the US criticism, Prime Minister Binyamin Netanyahu said at a July 19 cabinet meeting that Israel wouldn't tolerate any restrictions on Jews buying property in the city. "Our sovereignty in Jerusalem is indisputable," Netanyahu said. While West Bank settlements also attract American contributors, Jerusalem is the region's main flashpoint, said Gershom Gorenberg, author of The Accidental Empire: Israel and the Birth of the Settlements. Palestinians view east Jerusalem as the capital of a future Palestinian state, a goal Gorenberg said the Jewish real-estate purchases are meant to block. Donors "want to prevent any political compromise that might lead to a peace agreement," he said. Ateret Cohanim leaders point to municipal records and maps that show a Jewish majority in the Old City between 1880 and 1936, before Jordan captured the area in 1948. Most of the properties they have bought once had Jewish owners, the group says. "We are coming home, we are growing, we are building and it will continue," said Yossi Baumol, former executive director of Ateret Cohanim. He now raises money for the Jewish community in Hebron. Obama has picked the wrong battle, says Michael Rubin, a resident scholar at the American Enterprise Institute in Washington. "Obama should be president and broker final-status talks, he shouldn't be the zoning commissioner," Rubin said in an e-mail. "If Obama is saying that since Jerusalem is disputed, no construction should be permitted, he's now going to face demands about ALL construction in the city, both Arab and Jewish." Every Jerusalem resident "is permitted to build anywhere he or she desires, as long as they meet the building codes of the city," says Jerusalem Mayor Nir Barkat. "They have the right to build and live there like anywhere in Jerusalem," he said at a July 23 news conference during a visit to New York. Another group, the Elad Association, has focused on implanting about 60 Jewish families among the 3,000 Palestinians who live in the Wadi Hilweh and Bustan areas in the Silwan neighborhood, according to Ir Amim, an advocacy group for Palestinians in the city. The homes sit on a steep slope below the Old City. Elad received $2.5m. from New York-based Friends of Ir David Ltd. in 2007, according to the IRS records, which also show that Friends of Ir David got $405,000 in contributions from the Irving Moskowitz Foundation that year. Under an agreement with the Israel Nature and Parks Authority, Elad has promoted Silwan to tourists as the site of King David's Jerusalem, the City of David. Donors to its visitors' center include Moskowitz, who according to his foundation's Web site was born in 1928, and Eugene Shvidler, a Russian-American oil billionaire and business partner of Chelsea soccer team owner Roman Abramovich. The names of Shvidler and his wife, Zara, are embossed in metal letters on a large slab at the entrance to the visitors' center. Moskowitz's name is on a smaller plaque inside a stone arch in the interior. "They're trying to erase the fact that this is an Arab village and turn it into an Israeli tourist attraction," said Jawad Siyam, 39, a Palestinian community activist who has fought residential evictions in court. "When tourists come to the village, they have no idea who's really living here." Doron Spielman, a spokesman for Elad, said: "The preservation and development efforts of the City of David project have brought hundreds of thousands of visitors to the neighborhood in recent years, and one can clearly see infrastructure improvements that benefit both Arab and Jewish residents, along with the opening of Arab-owned shops in the area." Rennert, founder of New York-based Renco, an industrial holding company, declined through spokesman John Dillard to comment on any property purchases in Jerusalem. Shvidler, a partner with Abramovich in Moscow-based investment company Millhouse LLC, declined to respond through spokesman John Mann. The Hawaiian Gardens, California-based Irving Moskowitz Foundation didn't reply to a message sent through its Web site. A phone number listed on its 2007 tax return was disconnected. The donations are not alleged to violate any laws. When Netanyahu in his first term as prime minister in 1996 opened a restored ancient tunnel bordering the Temple Mount, riots broke out that left about 70 Palestinians and at least 12 Israelis dead. Moskowitz and Rennert are contributors to that tunnel complex, one of the Old City's biggest tourist attractions, according to the Web site of the Western Wall Heritage Foundation, which maintains and develops the Western Wall. In 2008, the Rennert-funded Guardian of Zion award was given to Elad founder David Be'eri and executive vice president Yehuda Maly, who each received $50,000. Both Rennert and Moskowitz were honorary chairmen of a New York fund-raising dinner last year for the Jerusalem Reclamation Project, which supports Ateret Cohanim. The invitation to the $300-per-person event shows 43 honorary chairs in all and 41 associate chairs. Friends of Ir David reported to the IRS that it raised $3m. in 2007, the last year for which records were available. From 2003 to 2006, the group raised $14.7m. New York-based Friends of Ateret Cohanim raised $2.1m. the same year, according to its IRS filing. In the previous four years it raised $5.6m. The Moskowitz foundation gave $50,000 to Ateret Cohanim in 2007, according to IRS records. The group conducts its purchases of Arab homes in an unmarked office in downtown Jerusalem.