JERUSALEM, June 3 (JTA) If Israel and the Palestinian Authority are interested in having the United States help them move toward a peace deal, they weren’t showing it this week. Hours before CIA Director George Tenet arrived in Israel on Monday, each side took a step that threatened to derail the effort. On Monday, a Palestinian tribunal angered Israel when it ordered the release of a radical Palestinian leader who Israel claims ordered the assassination of Tourism Minister Rehavam Ze’evi last October. The court in the Gaza Strip said there was no evidence linking the secretary-general of the Popular Front for the Liberation of Palestine, Ahmed Sa’adat, to last October’s murder of Ze’evi in a Jerusalem hotel by a PFLP squad. Along with four PFLP members convicted by a Palestinian court for the Ze’evi murder, Sa’adat was imprisoned in a Jericho jail under U.S. and British supervision as part of a deal ending the Israeli siege of Palestinian Authority President Yasser Arafat’s Ramallah headquarters. Despite the court ruling, there was no sign that Sa’adat would be freed. The ruling outraged officials in Jerusalem, who said it violated the understanding that had ended the five-week siege of Arafat’s headquarters. Prime Minister Ariel Sharon’s spokesman, Ra’anan Gissin, threatened a harsh Israeli response. “If he is not brought to justice,” Gissin said, “we will bring justice to him.” Defense Minister Benjamin Ben-Eliezer said that if the agreement was violated, then Israel would consider itself free of its commitments to the Palestinian Authority and would act according to its own interests. In Washington, the court ruling was given a less than enthusiastic response from the U.S. State Department. “We expect the Palestinians will work with the Israelis rather than take unilateral steps,” a State Department spokesman, Philip Reeker, said Monday. The court ruling was not the day’s only potentially explosive development. In a move likely to raise Palestinian hackles, construction began Monday on a new Jewish neighborhood in southeastern Jerusalem. Several hundred apartments are planned for the site in the predominantly Arab neighborhood of Jabel Mukaber, Israel Radio reported. According to the report, workers began fencing off boundaries at the site, where a luxury hotel complex is planned along with a housing development. The project is headed by former Jerusalem police chief Aryeh Amit, who told Israel Radio that all the required permits had been obtained before work began. Jerusalem Mayor Ehud Olmert dismissed claims by Arab residents of the area that the property is theirs. He also rejected the suggestion that the construction, beginning as Tenet is visiting the region, is coming at a bad time. “If it had been up to me, this neighborhood would have been built long ago,” he said. The construction touched on two of the most sensitive issues in the Israeli-Palestinian conflict: settlement building and sovereignty over Jerusalem. Sharon’s government has committed itself not to build new settlements, allowing only for construction within existing settlements to accommodate population growth. But the new neighborhood is located in eastern Jerusalem, which Israel annexed in 1967. The government does not consider construction there part of settlement growth. The two moves reflected the obstacles awaiting Tenet, who is visiting the region this week to discuss revamping the Palestinian security services. Doing so, according to U.S. thinking, will help reduce Palestinian terrorist attacks and pave the way toward diplomatic progress. Even before Tenet’s arrival, Israeli commentators were predicting that he would encounter skepticism over any Palestinian reforms implemented by Arafat. Sharon has made clear that Arafat must be sidelined as part of the reforms. Sharon conveyed this message when he met last Friday with William Burns, the assistant U.S. secretary of state for Near Eastern affairs. He repeated the stance again Sunday to the European Union’s foreign policy chief, Javier Solana, who was in the region to try to organize a Middle East peace conference in July. Solana rejected the conditions set by Sharon, who demanded a complete halt to terrorist attacks and incitement, as well as reforms in the Palestinian Authority. Israel “cannot set conditions regarding reforms that Yasser Arafat has to carry out,” Solana said. He also said the conference should set a date for the establishment of a Palestinian state. As part of his much-publicized reforms, Arafat said recently that he wanted to change the composition of the Palestinian Cabinet. By Monday, however, it became clear what changes he had in mind: He offered Cabinet spots to four terrorist organizations, but all turned him down. Previous to the refusal by Hamas on Monday, Islamic Jihad, the Popular Front for the Liberation of Palestine and the Democratic Front for the Liberation of Palestine also said they would not join Arafat’s Cabinet.