WASHINGTON, October 1 (IslamOnline & News Agencies) - U.S. President George W. Bush, at the risk of angering the Arab and Muslim worlds, signed legislation Monday, October 1, that requires his administration to identify occupied Jerusalem as Israel's capital.

Faced with a choice between endorsing the controversial bill passed by Congress and shutting down U.S. diplomatic activity, Bush put his signature on the Foreign Relations Authorization Act for 2003, which gives the administration more than $4 billion for running the State Department, said the Israeli daily newspaper, Ha’aretz.

Bush had the power to veto the bill, but the provisions on occupied Jerusalem were only a small part of a piece of legislation that covers the whole world and gives his administration the money needed to run diplomacy.

In a written statement, Bush said U.S. policy regarding Jerusalem "has not changed."

If Congress meant the language on Jerusalem to be mandatory, then lawmakers were encroaching on the president's right to conduct foreign policy, he said.

"The purported direction... would, if construed as mandatory rather than advisory, impermissibly interfere with the president's constitutional authority to formulate the position of the United States, speak for the nation in international affairs and determine the terms on which recognition is given to foreign states," Bush said.

State Department spokesman Richard Boucher said Monday that the United States continues to believe that the status of Jerusalem should be decided in "permanent status" talks between Israelis and Palestinians.

"We have always opposed legislative action that hinders the president's prerogatives in advancing our interests in the region and promoting a just and lasting peace," he added.

Boucher said the Bush administration also had opposed this part of the legislation. "Those kinds of provisions are not helpful," he told a news briefing.

The bill goes further on occupied Jerusalem than previously demanded by Congress, which for years has pressed successive presidents on the related question of moving the U.S. Embassy in Israel from Tel Aviv to occupied Jerusalem.

The new legislation, passed by Congress last week, adds three mandatory provisions that change the way the United States treats occupied Jerusalem.

It says that none of the funds appropriated can be used for a diplomatic facility in Jerusalem unless it falls under the supervision of the U.S. ambassador to Israel. Presently, the U.S. consul general in Jerusalem, who deals mainly with Palestinians, now reports directly to the State Department.

It also denies the use of funds for any official U.S. government document, which lists countries and their capitals, unless the publication identifies Jerusalem as the capital of Israel.

Third, in official U.S. documents such as passports, birth certificates and nationality certifications, U.S. citizens born in Jerusalem may insist that the documents record their place of birth as Israel.

Lastly, the legislation also withholds $10 million of $35 million in economic aid allocated to Lebanon in 2003 until the Lebanese army deploys to the Israeli-Lebanese border and the Lebanese government asserts its authority in the area where the army deploys - a direct reference to the Lebanese government’s allowing the resistance group Hezbollah to maintain order in the disputed Shebaa Farms area.

The bill also urges the president to impose sanctions against the Palestinians if they do not comply with signed agreements, providing for an additional $300 million in aid to Israel, including $100 million in munitions as it prosecutes its campaign in the West Bank and Gaza, while rejecting additional equivalent aid for Egypt, the U.S. daily newspaper, the Washington Post, reported.

The language of the bill reflects the pro-Israel stance of Congress; language regarding the move was contained in both the House and Senate versions of the bill, which Congress passed September 26.

Previous U.S. administrations have promised to make the move but have repeatedly put it off because of the ill feeling it would create in the Arab world, which considers Arab East Jerusalem to be occupied territory and the capital of a future Palestinian state in the West Bank and Gaza.

The U.S. official position has been that the future of the city should be decided through Israeli-Palestinian negotiations.

The Arab American Institute wrote to Bush Friday, September 27, urging him to veto the bill, on the grounds that it overturns existing U.S. policy and presidential authority.

“At a time when you are building a coalition to support our goals in the Middle East, Congress should not be undermining your efforts,” said George Salem, chairman of the institute.

“If made into law, [it] will further inflame and deepen resentment among Arabs and Arab countries toward the United States,” added the institute’s president, James Zogby.

“While the administration works to strengthen our relations throughout the region, a few members in Congress use stealth tactics to pass legislation that was not considered fully by either house. This is not the way to make policy where so many vital U.S. interests are at stake.

“We are trying to build a coalition in the Arab world,” said Zogby. But with passage of the bill, “we will be inflaming people and making it difficult for people to work with us.”

One administration official agreed, saying, “There are many in the region who would view this with grave concern, because it suggests we have abandoned our traditional impartial role,” the Post reported.

And Salem noted, “These provisions represent a serious shift in policy and are potentially disruptive to emerging efforts to reform Palestinian institutions. Jerusalem is one of the most critical issues in this conflict; and any attempt to create a de facto, Congressionally-mandated recognition of Israel’s sole claim flies in the face of three generations of U.S. foreign policy.”

Israel captured the eastern part of the city in the 1967 Six-Day War and later annexed it. Israeli governments have said the whole city is Israel's eternal capital.