Jewish construction is seen as an obstacle to peace; burgeoning Arab construction in Jerusalem (much of it illegal) is not. You only have to read Justus Reid Weiner's research exposing the construction boom in thousands of Arab units in Jerusalem, much of it lavishly funded by Saudi Arabia, the Gulf states and the Palestinian Authority, to understand that peace is not the issue. On the contrary, over the last several years, the Arabs have been engaged in a political and demographic race for control of Jerusalem.
To the US government and the European Union, everything is black-and-white: in their eyes west Jerusalem is 'Jewish', and east Jerusalem, where Israeli sovereignty is not recognised under international law, remains 'Arab'. In truth, this simplistic view ignores the fact that the eastern part of Jerusalem only became Jew-free when the thousands of Jewish inhabitants were 'ethnically cleansed' from the old city in 1948, scores of synagogues destroyed and cemeteries desecrated during 19 years of Jordanian occupation. The city was reunited when the eastern side of the city was recaptured and annexed in 1967 by Israel.
The issue of land ownership in Jerusalem is far more complex than the Obama administration and the EU would have us believe. Mount Scopus - the original site of the Hebrew university campus and the Hadassah hospital - remained a Jewish enclave in Jordanian-controlled territory. It is also a little known fact that hundreds of thousands of Arab squatters in 'Arab east Jerusalem' live on land still owned by the Jewish National Fund. The JNF purchased hundreds of individual parcels of land in and around Jerusalem during the 1920s, 1930s and 1940s. Some ended up under Jordanian control. In 1948, on one of these parcels the UN built the Kalandia refugee camp, seizing the land without permission from the owners, the JNF. As Gil Zohar explained in his 2007 Jerusalem Post piece other parcels of land in 'Arab' east Jerusalem were cut off from their Iraqi and Iranian Jewish owners after they came under Jordanian rule. In total 145,976 dunams* of Jewish land is said to have come under Jordanian control. ((Jewish property claims against Arab countries by Michael Fischbach, p 85).
Another 16,684.421 dunams of Jewish land in the rural West Bank - including the Gush Etzion settlements, land between Nablus, Jenin and Tulkarm, and in Bethlehem and Hebron - were seized by the Jordanians after 1948.
The Golan Heights are almost universally considered 'Syrian' territory and yet the JNF lays claim to 73,974 dunams in southern Syria (op cit, p36). The earliest purchase was made in the 1880s.
On the macro-level, it is estimated that Jews living in Arab countries owned some 100,000 sq km of deeded property, equivalent to four or five times the size of Israel. Many cities in the 'Arab' Middle East and North Africa had large Jewish populations. Baghdad was a quarter Jewish. When over 90 per cent of Iraq's Jews left for Israel in 1950 - 51, property seized by the Iraqi government included three hospitals, 19 Jewish schools, 31 synagogues and two cemeteries.
In Egypt mansions belonging to wealthy Jewish families became embassies, residences and public institutions. Jihan Sadat still lives in a mansion once owned by the Castro family, and president Mubarak reputedly has the use of a villa owned by the Smouha family.
The international community gets into a huff when Jerusalem property once owned by Arabs is legally bought by Jews. Across the Arab world, Jewish property has been abandoned, sequestered or sold well below market value as Jews left in haste or were driven out. The West is sanctioning the principle that the Arab world must be Jew-free (Arab states have almost succeeded in this task, having banished 97 percent of their Jewish population) . The takeover of millions of dollars' worth of Jewish homes, shops, offices and communal property by Arabs has never been considered provocative or an 'obstacle to peace'.
Double standard, anyone?
* 1 dunam= 1,000 sq. metres
Update (with thanks Lily) : the irony that the Shepherd hotel in Jerusalem should have been owned by a man committed to making the Middle East Judenrein has not been lost on Avigdor Lieberman who has ordered a photo of al-Husseini meeting Hitler to be disseminated by the Israeli foreign ministry.