The location of the US embassy in Israel has generated considerable controversy here in the US. The American government has never fully recognized Jerusalem as the capital of Israel, preferring to let that contentious point get determined in final Israeli/Palestinian peace talks. Both Bill Clinton and George W Bush promised to move the embassy to Jerusalem, but neither actually took the step.
According to Arutz Sheva, the Israelis themselves pressed the US to remain in Tel Aviv (via Keshertalk):
Former Israeli Consul General to the US Yoram Ettinger revealed at the Jerusalem Conference Wednesday that Israel prevented a move that would have relocated the US Embassy to Jerusalem.
“The US Senate was ready to do away with the waiver that allows the president to defer the moving of the embassy to Jerusalem,” Ettinger said during a round-table discussion at the Jerusalem Conference. “There were over 80 senators – enough to override any [presidential] veto.”
It was the Israeli government, Ettinger said, who intervened on behalf of leaving the Embassy in Tel Aviv. “The problem is that both houses of congress have been firmer on Jerusalem than any Israeli government since 1993.”
Ettinger did not elaborate which Israeli government it was that told Congress to stand down.
In 1995, Congress passed the Jerusalem Embassy Relocation Act. This got overwhelming approval, but it allowed the President to sign a waiver if, for diplomatic or security reasons, the move needed to be delayed. Clinton and Bush did so 12 times, delaying the move while both administrations attempted to engage the Palestinians and to eliminate their terrorist activities.
Arutz Sheva gave no reason why the Israelis objected to the move. Perhaps they recognized the provocative nature of the transfer. No other nation has its embassy in Jerusalem. Hezbollah leader promised terrorist attacks on any American embassy located in Jerusalem, but we rarely let terrorists dictate our actions anywhere. The bigger problem would be the almost-certain reaction from the Palestinians and the appearance that we had decided on the Jerusalem question without their input, something that even the Israelis know would lead to another intifada.
It looks like we’ll be staying in Tel Aviv for the foreseeable future, and that our present location suits the Israelis just fine.