What constitutes illegal construction

Chief Rabbi: Obama 'Settlement' Stance Opposes Torah
Sephardi Chief Rabbi Shlomo Amar called on American Jews this week to explain to the Obama administration the religious obligation of every Jew to live in every part of the Land of Israel, according to the Jerusalem Post. The newspaper obtained a letter addressed to American rabbinical organizations and the Conference of Presidents of Major American Jewish Organizations, in which Amar wrote that "the Torah commands the Jewish people to live in Israel. And we hear that the US is putting pressure on the Israeli government to prevent Jews from living or building their homes in large parts of the Land of Israel."
http://www.israelnationalnews.com/News/Flash.aspx/168264

Apparently, the American adminstration is only interested in opposing legal Israeli construction.
Informed security sources in Jerusalem told WND the PA is acting on three fronts to increase its presence in Jerusalem and to thwart property sales to Jews. First, the PA is leading a campaign to terrorize Arabs thinking of selling land to Jews. Second, the PA is attempting politically to become a larger player in Jerusalem, competing with Jordan for influence over strategic Arab areas. The PA also is attempting to fund popular Israeli religious leaders associated with Jerusalem, such as Islamic Movement chief Raed Shallah. Third, the PA has increased its intelligence activities in Jerusalem to thwart property sales to Jews.

The Obama administration has called for a halt to Jewish construction in eastern Jerusalem and the strategic West Bank in line with Palestinian claims on eastern Jerusalem as a future capital, even though the city was never a part of any Palestinian entity.
To read full article, click here.

Illegal Arab construction is promoted. The following are excerpts from a WND article published in April.
Under intense American pressure and following a nearly unprecedented behind-the-scenes U.S. campaign, the Israeli government has decided not to bulldoze Palestinians homes built illegally on Jewish-owned property in Jerusalem, WND has learned.

Like tens of thousands of other Arab housing projects throughout eastern Jerusalem, the Palestinian homes in Silwan were illegally constructed on property long ago purchased by Jews. The Israeli government ordered the structures' legal demolition.

WND has learned that in the weeks since Clinton's visit here, the U.S. has mounted an intensive campaign lobbying the Israeli government against tearing down the illegal Palestinian homes in Silwan. The campaign included letters from the Middle East section of the State Department addressed to various Jerusalem municipalities, with copies of the letters sent to the offices of Israel's prime minister and foreign minister. The letters called on Israel to allow the illegal Palestinian homes in Silwan to remain and stated any demolitions would not foster an atmosphere of peace.

A WND investigation last month determined the U.S. has been aiding the Palestinians in developing infrastructure in eastern Jerusalem, including on property owned by Jews.
The situation has been unfolding in the northern Jerusalem neighborhoods of Kfar Akeb, Qalandiya and Samir Amis, which are close to the Jewish neighborhoods of Neve Yaacov and Pisgat Zeev in Israel's capital. Kfar Akeb, Qalandiya and Samir Amis are located entirely within the Jerusalem municipality.
Much of the property there is owned by private Jewish landowners or by the Jewish National Fund, a U.S. Jewish group that purchases land for the states purpose of Jewish settlement.
http://www.wnd.com/index.php?fa=PAGE.view&pageId=94265