Through the fog Benjamin Netanyahu is creating around the new Egyptian-American initiative, one can discern the outlines of the emerging formula to resume the peace process. The formula consists of accelerated negotiations to establish a Palestinian state, with the 1967 lines as its borders (with territory exchanges) and East Jerusalem as its capital.

The Obama administration has been making efforts in the last few days to raise overall Arab and international support for this plan and bring Israel and the Palestinians back to the negotiation table. The president's envoy George Mitchell said on Wednesday that a final status agreement could be reached in less than two years.

Meanwhile, in Jerusalem the prime minister is reverting to his old ways. Whenever there seems to be progress in the Israeli-Palestinian track, Netanyahu pushes East Jerusalem to center stage. During his first term in office, his one hand signed the Hebron agreement and shook Yasser Arafat's hand at the Wye Plantation. His other hand, at the same time, was signing the scheme to populate the Ras al-Amud neighborhood with Jews and a plan to build the Har Homa neighborhood on land confiscated from Palestinians.

The "new" Netanyahu is acting exactly as the old one did. In the Bar-Ilan University speech in June the prime minister adopted the two-states-for-two-peoples solution. But in July he announced his support for a right-wing group's construction enterprise in the Shepherd Hotel compound in the Sheikh Jarrah neighborhood.

Then a report about expanding the Gilo neighborhood appeared and shortly afterward the Housing and Construction Ministry stated that it was issuing tenders to build 692 housing units in Pisgat Ze'ev, Neveh Yaakov and Har Homa.

This week it transpired that Jerusalem's municipal council is advancing right-wing organizations' plans to house Jews on the Mount of Olives and Shuafat, demonstrating that the construction spree in East Jerusalem reaches the very heart of the Arab neighborhoods.

The prime minister accompanied the cabinet's decision to temporarily freeze West Bank settlement construction with declarations that the restrictions would not apply to East Jerusalem. The American administration and even Palestinian Authority President Mahmoud Abbas understood that coalition constraints prevented the prime minister from openly undertaking to freeze construction in the capital. However, they expected Netanyahu to reject government real estate initiatives in East Jerusalem and thwart right-wing groups' efforts to carry out volatile faits accomplis intended to sabotage the peace talks.

Netanyahu's encouragement - albeit silent - to the variety of government, municipal and private blueprints to populate East Jerusalem with Jews is casting doubt over his enthusiastic calls to resume the talks with the Palestinians. Accelerating Israeli construction in the east of the city, which the international community sees as the capital of the future Palestine, is regarded as provocation, intended to sabotage the negotiations even before they begin.

Like his predecessors, Netanyahu agreed to negotiate over Jerusalem's status as part of the final status agreement. But his acts foil any possible compromise, deepen the conflict in the city and destroy the chance to implement the two-state solution.