Analysis: Netnayahu faces US crisis
The Israeli Prime Minister faces political meltdown as America steps up the pressure over settlements
A Palestinian youth throws back a tear gas canister during clashes near a checkpoint between Ramallah and Jerusalem this week
Binyamin Netanyahu is not a natural gambler. He hates making decisions and will use every opportunity to defer and procrastinate. But this week he was handed a clear ultimatum by the White House: make the choice - us or your coalition.
His response: to continue playing for time.
Acceding to Secretary of State Hillary Clinton's demand that the Israeli government cancel the decision to build 1,600 new homes in the Charedi neighbourhood of Ramat Shlomo in east Jerusalem would guarantee a coalition crisis and a full-scale revolt within Likud. That much is certain and Mr Netanyahu will do everything to avert such an outcome or, at the very least, try and make sure it happens according to his timing.
The origin of the current dispute with the Americans tells us a lot about the inner dynamics of the Netanyahu coalition. He did not know that the Interior Ministry was about to announce planning approval for the new homes and was very angry at it coming out during Vice President Joe Biden's visit. The ministry is controlled by Shas; specifically by the party's leader, Eli Yishai. Mr Yishai's chief rival within the party is Housing Minister Ariel Attias, who is getting much of the credit for building new homes for the Charedi community.
Authorising the building is a way for Mr Yishai to burnish his own credentials both within the Charedi sector and with right-wing voters, the very voters who could vote for either Shas or Likud.
The Prime Minister's Office has issued new instructions that will coordinate all planning procedures, hopefully in a way that will make sure no embarrassing announcements come out during the next visit of a senior American official.
But Mr Netanyahu knows very well that as long as he needs Shas in his coalition, the potential for embarrassment (and worse) is always there.
Satisfying Shas and the right-wing, however, carries a price: the already deep crisis in his relationship with the Obama administration may deepen even further.
Mr Netanyahu's experience of American politics goes back even further than his Israeli experience. His belief is that an embattled administration, needing every vote it can get in Congress for health reform and facing potentially damaging mid-term elections later this year, can only go so far in intimidating Israel.
He knows that he will never be on friendly terms with Barack Obama but his instinct tells him that after a week of condemnations and stern statements, the administration will have to backtrack and start reassuring Israel's many allies in Washington.
The Netanyahu strategy for now seems clear. Shas, Yisrael Beiteinu and the Likud hardliners can topple his government tomorrow so, for now, he is appeasing them. This week he said that all Israeli prime ministers since 1967 had authorised building in east Jerusalem and he certainly isn't going to act differently. The Americans, on the other hand - he reckons - have gone as far as they can go.
Next week he will be in Washington. President Obama will be out of town but he will meet Vice President Biden and Secretary Clinton.
The tone of these meetings will be crucial. If they make reassuring statements on America's eternal commitment to Israel, he will know that he is safe for now.
But if they continue making public demands that he stops building in Jerusalem, he will know that something has fundamentally changed and will have to rethink his strategy. At that point, a phone call to Tzipi Livni, asking to restart coalition talks, may be his only option.