"We came here with 15 people to settle and 40 supporters to live here peacefully," says Ronn Torossian, spokesman for the Jewish settlers who had just taken over a large house in Ras al-Amoud, a district in which live 11,000 Palestinian. Mr Torossian, 23, formerly from the Bronx in New York and waving an Israeli flag, said that his group would be taking over other houses in the neighbourhood in due course. He admitted some of the settlers were armed, adding: "There cannot be peace with [Yasser] Arafat. There cannot be peace with the Arabs who want to kill the Jews."
The takeover of two houses - one a large villa and the other a small office - within sight of the Muslim shrines of al-Aqsa and the Dome of the Rock, appears to have been timed by the settlers to sink any hope of further peace negotiations between Israel and Palestinians. Many of their cars bore the stickers: "Save Israel - Stop Oslo Now."
Benjamin Netanyahu, the Israeli Prime Minister, said yesterday that the Israeli government did not approve of the takeover. His office said that it had known about it only a short time before it happened. But the settlers were sure that Mr Netanyahu was with them in spirit. Mr Torossian said: "He knew what we were doing. He supports building in Jerusalem."
The settlers' move into Ras al-Amud is also a sharp rebuff to Madeleine Albright, the United States Secretary of State, who last week directly called in a speech in Jerusalem for a "time out" on further Jewish settlements. She also appeared to have persuaded Yasser Arafat, the Palestinian leader. to arrest over 100 alleged members of Hamas, the Islamic militant organisation which is believed by Israel to have sent the suicide bombers who have killed Israelis in two attacks.
Inside the villa, now decorated with Israeli flags and defended by about 50 paramilitary police, there was a mood of jubilation. Although the government had the legal right to stop the takeover on overall security grounds it had not done so. Batya Klein, 22, one of the settlers, said: "We told the police what we were going to do early yesterday morning."
Palestinians in Ras al-Amud were either dejected or enraged. Ali Hamdullah, a truck driver, lives in a large white house 100 yards from the settlers' new villa. Although he was born in the house in 1956 the courts have been trying to evict him on the grounds that it was illegally constructed half a century ago. He said: "I was waiting here last night to see if a settler would try to come and take my house. If he did I would have killed him and then they would have killed me."
The man who financed the purchase of the houses taken over by settlers this week as well as a further 3.5 acres of Ras al-Amoud is Irving Moskowitz, an American multi-millionaire whose wealth comes from private hospitals and one of the world's bigger bingo parlours in Long Beach, California. Batya Klein said the three settler families rented from Dr Moskowitz, whom she described as "a warm and friendly man".
The settlers said they had paid Palestinians who were renting the property for vacant possession. But at both houses there were disconsolate groups of Palestinians who said they had just been evicted. Imad Hamad, 30, who kept a bus and a mini-bus on land which had also been taken over said: "People who really own things don't come like thieves in the middle of the night." He pointed to where the settlers had used a tow-truck to rip up one of his gateposts out of the concrete.
Danny Seidemann, a lawyer for some of the Ras al-Amud residents, said it was wrong for Mr Netanyahu to say his legal options were limited. "The government and the police had an absolute right to stop this on general security grounds under a ruling by the attorney general in 1991." He said: "This will make Jerusalem like Hebron, a city of hate. It isn't a level playing field on property rights since Palestinians have had one third of their land in the city expropriated."
Benny Elon, a member of the Knesset (parliament) from the radical right, speaking outside the seized villa, agrees that the legal technicalities do not matter. He said when Ras al-Amud becomes a larger settlement it will stop Palestinians ever claiming even part of Jerusalem as their capital. He added: "This is not a debate. This is a war."