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A shiny pink dossier stands out among the thousands of brown files packing the long shelves of the government archives. It is not clear who decided on such a conspicuous color, but the dossier contains numerous love letters and photographs that tell the story of the Shepherd Hotel in East Jerusalem's Sheikh Jarrah quarter in the decades before it became a bone of contention between Israel and the United States. The two countries are currently divided over Israel's plan to build 20 housing units for settlers at the site.

Last month, right-wing activists held a festive event to protest efforts by U.S. President Barack Obama's administration to quash the construction plans. The guest of honor was Mike Huckabee, the former governor who ran unsuccessfully last year to become the Republicans' presidential candidate. At the entrance to the hotel, he was greeted by the quasi-official host of the event, Daniel Luria, who heads the Ateret Cohanim organization. Luria explained to the journalists present that there was historic justice in allowing Jews build at this site, where once upon a time, a sworn enemy of Zionism and the Jews - the former mufti of Jerusalem, Haj Amin al-Husseini - had lived.

This is only partly true. The building was indeed built for the mufti, but it was built by a company that was partly Jewish, and the mufti himself never actually lived there. Instead, the building served as the site of parties, forbidden loves and political intrigues.

The first scandal broke out even before the building was completed: The entire project apparently began as a bribe. Baruch Katinka, a Jewish engineer and member of the Haganah (a pre-state Jewish underground), was a partner in the Albina Katinka Dunia construction company, which was in charge of building the house for the mufti. He later wrote a book, Me'az ve'ad Hena ("From then till now") in which he recounted his part in the affair.

"In one of my conversations with the mufti," he related, "he told me that despite his difficult job and his high-ranking position, he was not a rich man at all and did not even have sufficient money to finish building the house in Sheikh Jarrah ... I asked the mufti to show me the plan for the house and I proposed to him that we would build it cheaply. Without a contract and without inquiring about the cost, the mufti gave us the work."

At that time, Katinka's firm was also building the high-class Palace Hotel, and Moshe Hananel, an amateur historian of the British Mandate period who researched the history of the Shepherd Hotel, believes the house served as a kind of "hostage" to ensure that money for the Palace Hotel would continue to come in and that labor relations would remain satisfactory.

When the building was completed, the mufti transferred the right to live in the house to his personal secretary, George Antonius, and his wife Katy. Antonius, an early exponent of Arab nationalism, was well known to the Jewish establishment, and David Ben-Gurion, then leader of the Yishuv (pre-state Jewish community), held a series of meetings with him in the hope of reaching an agreement with the Palestinian national movement.

The Antoniuses were at that time local celebrities. They were very well educated, spoke fluent English and French, enjoyed life and had an extremely well-stocked bar. Their salon was the most prestigious in the city. A good picture of their life can be obtained from a letter that Antonius wrote to his daughter, who was living in France. "He used the cliche, 'it's not what it seems to be'," Hananel said. "And then he mentions all the couples she had seen in their home."

No Jews invited

Antonius passed away in 1942, and Katy became a young widow with extensive social ties, living in a luxurious home. All the members of Jerusalem's elite would visit her home - except the Jews. Only one Jew had the honor of attending her parties: the journalist Gabriel Tsifroni, who wrote for British newspapers.

The pink dossier contains many pictures of the good life that Katy Antonius enjoyed. She can be seen, cigarette in hand, looking through the window of her home, with a man beside her; in the garden with a group of friends; or skiing in the mountains of Lebanon. Hers was a very unusual lifestyle for a generally conservative Palestinian society. Even 60 years after she left the neighborhood, Hananel said, her elderly Palestinian neighbors spoke disparagingly of her when he interviewed them. "There was a young man there, and they refused to speak about her in his presence," he related.

Leaders of the Yishuv feared Katy's anti-Zionist influence on senior members of the British administration who were friendly with her. This fear intensified when she became involved in Jerusalem's most talked-about love affair of the time - with the commander of the British forces in Palestine, Evelyn Barker, who was well known for his opposition to the Yishuv.

Barker himself lived in the most beautiful home in western Jerusalem at that time, the Schocken villa in Rehavia. The love letters between the two, included in the pink dossier, bear witness to their torrid romance, as well as to Barker's hatred for Jews and Zionism.

The last letter was written after Barker was sent home for having made an anti-Semitic remark following the bombing of the King David Hotel by the Irgun (another pre-state underground): He said the British would punish the Jews "in the way their race most dislikes, by striking at their pockets."

In the letter, Barker expresses his deep sorrow at having to leave Katy; he describes her as a shining sun without whom he cannot live. But he also advises her to go to bed early, take care of herself, and find another love, adding sadly that he will have to learn to live with that.

Barker headed the hit list of both right-wing Jewish undergrounds (Irgun and Lehi), and the attempts to assassinate him did not end when he was forced to leave the country. In a letter he wrote to Katy from London, published in Tom Segev's book Yemei Kalaniot ("The Days of the Poppies"), he recounted receiving an envelope containing a greenish powder, silver paper and two electric wires. He realized what it was intended for, he said, and the device was dismantled by a sapper without causing harm.

In another letter quoted by Segev, Barker asked Katy to add formal documents of some kind to her letters, so that his wife would not be suspicious of their correspondence.

At the beginning of 1947, the Irgun blew up an Arab house very close to Katy's; as a result, she left her home. The Irgun said it had tried to warn her before the blast (as it did at the King David Hotel), but her telephone was constantly busy.

After she left the house, members of the Haganah raided it and confiscated the letters and photographs, which later found their way to the government archives. Later, a regiment of Scottish Highlanders was stationed there.

In April 1948, a few days after a massacre of Palestinians at Deir Yassin, dozens of Jews on their way to relieve the staff of the beleaguered Hadassah Hospital on Mount Scopus were shot from an ambush at the spot. For seven hours, the victims lay on the road, a mere 150 meters from the house, but not one soldier went out to give them assistance. Eventually, the wounded were evacuated to the house, where they were treated by doctors from Hadassah.

After the War of Independence, the house was taken over by the Jordanian authorities. An addition was built, which to this day obscures its original beauty, and it was turned into a hotel for pilgrims - the Shepherd Hotel.

Antonius never live there again, even though she returned to East Jerusalem again the war. She died in Beirut in 1984, and was thus spared the knowledge that her home was bought a year later from the Custodian of Arab Property by Irving Moskowitz, an American Jewish millionaire and patron of right-wing organizations in Jerusalem.

The hotel continued to operate even after the sale, but Moskowitz changed its name, apparently because of its Christian connotations, to the Hebrew "Sheffer Hotel." Then it again became a base for soldiers, this time from the Israeli Border Police.

About six years ago, the base was evacuated, and Moskowitz began promoting his plan to build Jewish housing there, to the chagrin of the Palestinians and Americans. The plan that was recently approved has given rise to the latest - but probably not the last - of the house's many scandals.