simon mcgregor-wood has more from jerusalem. >> reporter: a demrap dated building in east jerusalem, on land once owned by a famous palestinian leader. it's now at the center of another row, between the obama administration, and the government of benjamin netanyahu, over settlements. the israelis want to build settlements here. washington says that won't help the peace process, once it's stopped. netanyahu has come out fighting. unified jerusalem is the capital of the jewish people and the capital of the state of israel, he said. our sovereignty is nonnegotiatible. that means residents of jerusalem can buy apartments in any part of the city. but the palestinians want east jerusalem for the capital of their long fought state. a division of the city they believe is one of the final key status issues. >> the efforts being exerted in this process. this undermines the credibility of those involved in making the peace process continue. >> reporter: by picking a fight over this particular settlement project, netanyahu is telling the u.s. administration, we can discuss limiting settlement co

simon mcgregor-wood, abc news, jerusalem. >>> and one more note from overseas. the president of france, nicolas sarkozy, was rushed to a hospital by helicopter today, after feeling ill while jogging. we're told the medical tests came back normal. but sarkozy is spending tonight in the hospital as a precaution. >>> and coming up on "world news" this sunday, the stock market is up, way up. why are so many of us still so far down? we're going to look at what the numbers mean. >>> it is a staple of science fiction. computers stop taking orders and start giving them. but now, some scientists say this is a real possibility. it's our "closer look" tonight. >>> and the marriage penalty, paid in pounds. what you may be gaining when you say "i do." my husband and i, we love to go to steakhouses i can smile, i can carry on our conversation i do most of the talking yes i wear dentures and they fit wonderful super poligrip acts as a seal between my dentures and my gums super poligrip makes eating more comfortable. even well fitting dentures can feel more comfortable with sup

here's simon mcgregor-wood. >> reporter: this is israel's answer to the obama administration's demands to freeze settlement construction --more building. and the number of settlers is higher than ev before. the israeli military announced today over 3,000 now live on land palestinians want for their new state. israel's refusal to stop the building is putting real strain on relations between the obama administration and prime minister binyamin netanyahu. at this settlement just outside jerusalem, they are building 200 new apartments this year. they want to build 900 next year. unless president obama can persuade the israelis to stop this kind of project, his dream of middle east peace may remain just a dream. >> he will have to send a clear message to netanyahu, that if the settlements don't stop, israel will pay for it. >> reporter: and in damascus sunday, cairo this morning and ramallah tonight, special envoy george mitchell heard the same refrain --no peace talks until the settlements stop. but pre minister netanyahu is boxed in by a fragile right wing coalition and the settlers who v

simon mcgregor-wood is in israel tonight. >> reporter: first stop for george mitchell, damascus and president assad. >> i told president assad that president obama is determined to facilitate a truly comprehensive arab/israeli peace. >> reporter: that means a peace process involving all the arab states, including syria, lebanon and the palestinians. but to get the process started, the u.s. wants israel to stop building settlements on land where palestinians want for their state. so far, israel has refused and that has caused real tension in u.s./israeli relations. at this settlement near jerusalem today, we found it was business as usual. 200 new apartments this year. 900 planned for next year. the palestinians and the arab states say there won't be any peace talks with israel until the building stops. and unless it does, america's plan for middle east peace is stuck. >> just imagine that the saudis for instance will invite israelis to riyadh. and the next day their audience will see on al jazeera or abc that israel is starting a new settlement. >> reporter: for prime minister netanyahu, a se

simon mcgregor-wood is in jerusalem. >> defense secretary gates arrived in israel for a six-hour visit add its nuclear program will dominate his agenda. his izs hosts are skeptical about u.s. efforts to engage diplomatically. he was here to reassure them and remind them the u.s. is against israel taking matters into its own hands. >> the timetable that the president has laid out still seems to be viable and does not significantly increase the risks. >> special envoy to middle east peace george mitchell was the first to touch down in the region. it was damascus's president long shunned by america now seen a partner in the plan for peace. it would include syria, lebanon and the palestinians all making peace with israel. the u.s. wants goodwill gestures to get the ball rollg. for israel, it's still waiting for a freeze in settlement construction. it's an issue that's caused real tension. without it the palestinians say they won't talk. in this settlement near jerusalem it was business as usual. 200 new homes being built it year, over 900 planned for next year. a settlement freeze is hd fo