Prime Minister Binyamin Netanyahu's resolute response to a State Department official's objection to a Jewish building development in the Sheikh Jarrah neighborhood of Jerusalem may actually close a 90-year-old chapter of the Arab-Israeli conflict and bring about a measure of justice. "We cannot accept the idea that Jews will not have the right to live and buy [homes] anywhere in Jerusalem," Netanyahu said. For much too long Arab states, terrorist groups and Palestinian Arabs believed that they could wage "wars of limited liability" first against the Jews of Palestine and then against the State of Israel. They embraced a fantasy that they could unleash attacks with impunity in an attempt to wipe out Israel, convinced that if they were defeated they could return to a status quo ante, or even achieve diplomatically what they couldn't win on the battlefield. Territories captured by Israel would be returned and not annexed, terrorist leaders would be honored and not condemned, and Jews/Israel would be blamed and never indemnified. Tragically, that fantasy became reality. IN 1920, the Balfour Declaration was a very pertinent and relevant document in Palestine. The Turks left Palestine after 400 years, and the British attempted to establish their authority. Jews who had fled the Turkish regime began to return, and they were joined by other Jews - "Zionists" from Russia and Eastern Europe - eager to build the promised "national home for the Jewish people." Arab clans and local groups began to coalesce and compete to fill the vacuum left by the Turks. They found sympathetic British authorities who opposed the establishment of a Jewish home in Palestine and sought to rescind the Balfour Declaration. Together, they opposed Jewish immigration into Palestine and the Jewish purchase of large tracts of land. The Jewish settlement of Tel Hai in the Galilee was overrun by local Arab marauders in early 1920, and within months, riots and pogroms against Jews erupted across Palestine. According to witnesses, the ax- and sword-wielding mobs, emboldened by their perception of supportive British authorities, yelled, "Addowlah ma'anah! The government is with us! Itbah al-Yahud! Slaughter the Jews!" as they attacked Jewish communities. They were led by the nephew of Jerusalem's mayor, a young rabble-rouser named Haj Amin el-Husseini. Rather than throw Husseini in prison or hang him, the British appointed him as the grand mufti of Jerusalem. The anti-Semitic terrorist leader used his position to garner a following and a status that he would wield for the next 25 years, culminating in his collaboration with Adolf Hitler in World War II. WHEN THE British attempted to arrest the mufti in 1937, he fled Palestine, and the British made do with confiscating his property. The Husseini clan owned several well-known buildings in Jerusalem, among them the Palace Hotel on Rehov Mamilla (later Israel's Ministry of Industry and Trade and and now being rebuilt as a hotel), the Orient House (the site of Palestinian Authority attempts to establish its rule in east Jerusalem) and the Shepherd Hotel in Sheikh Jarrah on a plot of land known as Karam al-Mufti, named for Husseini. The Shepherd Hotel was located on a key roadway; just yards away is the site of the infamous Hadassah Hospital convoy massacre in April 1948. Seventy-nine Jews, mostly doctors and nurses, were killed on that road when their convoy to the Mt. Scopus hospital was attacked by hundreds of Arab terrorists. A meek British military response allowed the attack to continue for many hours throughout the day. Despite all of the Arab attacks against Jewish communities in Palestine in those years, the British response was to reward Arab aggression and impose draconian restrictions on Jewish immigration. Part of the British Mandate of Palestine, what could have been part of the Jewish homeland, was lopped off in 1922 and given to Emir Abdullah to later form the state of Jordan. Addowlah ma'anah. The pattern of Arab attacks and rewards would repeat itself time and again. Limited liability - the Arabs paid little for their attacks. In 1956, Egyptian-commanded fedayeen terrorist attacks caused Israel to join Britain and France in the Sinai Campaign against Egypt. Two days into the war, US president Dwight Eisenhower called prime minister David Ben-Gurion. According to a biographer of Jewish leader Max Fisher, Eisenhower admonished Ben-Gurion, "...You ought not forget that the strength of Israel and her future are bound up with the United States." This was followed by specific threats: If Israel did not leave Sinai and Gaza there would be UN condemnation, US aid would be terminated, the tax-status of charitable contributions would be challenged. AIPAC's founder, Si Kenan, wrote of the period: "There were long and feverish negotiations between the Israelis and secretary of state [John Foster] Dulles, who tried to divide American Jews, most of whom were backing the Israelis. Dulles invited a group of major Jewish philanthropists, including leading non-Zionists, to use their influence to persuade Israel to accept the US position..." Sound familiar and contemporary? To a recent meeting with American Jewish leadership, President Barack Obama also invited two leftist organizations highly critical of Israeli policies. In 1957, US pressure forced Israel to withdraw from Sinai without securing ironclad guarantees against Egyptian aggression and blockades.. In October 1965 Max Fisher visited Eisenhower at his Gettysburg farm. Eisenhower admitted to him, "... looking back at Suez, I regret what I did. I never should have pressed Israel to evacuate the Sinai." Several casus belli directly led to the 1967 Six Day War. They include Egypt's naval blockade of Israel, the massing of Egyptian troops in Sinai, Jordan's dispatch of tanks into the West Bank and shelling of Jerusalem, and Syria's bombardment of Israel's northern communities. The American and British drafters of the 1967 UN Security Council Resolution 242 also recognized the madness of returning to the 1949 armistice lines. "We didn't say there should be a withdrawal to the '67 line," said British ambassador Lord Caradon. "We all knew - that the boundaries of '67 were not drawn as permanent frontiers, they were a cease-fire line of a couple of decades earlier... We did not say that the '67 boundaries must be forever; it would be insanity." Yet, today, under the Arab concept of wars of limited liability, they and the UN demand a complete withdrawal from the West Bank and east Jerusalem - "100 percent" - and a dismantling of the security barrier erected to keep out Palestinian suicide bombers. In other words, there is no punishment, no price to pay and no indemnification for acts of aggression. Addowlah ma'anah. The actions and words of the Obama administration today elicit from Israel's "peace partners" echoes of that ominous war cry. "Obama," noted The Washington Post's Jackson Diehl after interviewing the Palestinian Authority's Mahmoud Abbas, "has repeatedly and publicly stressed the need for a West Bank settlement freeze, with no exceptions. In so doing he has shifted the focus to Israel. He has revived a long-dormant Palestinian fantasy: that the United States will simply force Israel to make critical concessions... while Arabs passively watch and applaud." Addowlah ma'anah. Ironically, Abbas himself recently revealed that once the Arabs of Palestine did not expect the great powers or other Arabs to rescue them, and that indeed they were capable of recognizing the responsibility for their actions. Describing the 1948 flight of his Arab community from Safed, Abbas admitted on Al-Palestinia TV last month, "People were motivated to run away... They feared retribution from Zionist terrorist organizations - particularly from the Safed ones. Those of us from Safed especially feared that the Jews harbored old desires to avenge what happened during the 1929 uprising. This was in the memory of our families and parents... They realized the balance of forces was shifting and therefore the whole town was abandoned on the basis of this rationale - saving our lives and our belongings." The acquisition of the Shepherd Hotel site was carried out according to the letter of the law. The land, first confiscated by the British, was administered by the Jordanian government after it illegally annexed the West Bank and east Jerusalem in 1950. Under international law, the Israeli government became custodian after the 1967 war. For the Past 15 years the building stood abandoned. Soon the piece of real estate will house the descendants of those whom Haj Amin el-Husseini tried to kill in Palestine, or the grandchildren of those European Jews who escaped Husseini's ally, Adolf Hitler. Maybe, just maybe, there are consequences for aggression. The writer served as a senior Israeli diplomat in Washington. Today he is a public affairs consultant and blogs at www.lennybendavid.com.