Scoop: U.S. won't reopen consulate in Jerusalem until Bennett passes budget

The Biden administration has decided to hold off on reopening the U.S. consulate in Jerusalem until after Israel's new government passes a budget, likely in early November, Israeli, U.S. and Palestinian sources say.

Why it matters: The decision shows how invested the Biden administration is in helping to stabilize the new Israeli government. The Prime Minister’s Office and Foreign Ministry had requested the delay.

• The consulate handled relations with the Palestinians before being shut down by former President Trump. President Biden has promised to reopen it, but he needs approval from the Israeli government, making it a political hot potato in Israel.

The big picture: The new Israeli government is still in survival mode, with opposition leader Benjamin Netanyahu and his right-wing bloc redoubling their efforts to create fissures between the ideologically divergent constituents of the coalition.

• The big challenge for the government will be passing a budget by Nov. 4. If the budget doesn’t pass, the government will fall. If it does pass, the government will almost certainly last another full year. 
• Netanyahu is trying to use the reopening of the consulate to create more friction between the parties. He claims that by agreeing to the U.S. move, the government would be accepting “a division of Jerusalem."

State of play: Palestinian officials told a bipartisan U.S. congressional delegation visiting Ramallah two weeks ago that they were aware the consulate wouldn't be reopened until after the budget passes, and said they could accept that as long as it happens at that point, U.S. and Palestinian sources say.

• Consultations inside the State Department about the reopening of the consulate, including who will serve as consul general, are ongoing and expected to take some time.
• A State Department official told Axios that the U.S. would be "moving forward with the process to reopen our consulate in Jerusalem" and had no additional details to share. 

Officials from the new Israeli government tell Axios they're satisfied with the level of dialogue, coordination and understanding they received from the Biden administration so far.

• They say this good coordination was essential earlier this week when a statement from the Prime Minister's Office marking the Jewish holy day of Tisha B'av mistakenly referred to "freedom of worship" for Jews on the Temple Mount, which is known to Muslims as Haram al-Sharif.
• That was seen as a deviation from the status quo, in which Muslims worship at the holy site and Jews visit.
• The Prime Minister’s Office and Foreign Ministry quickly clarified to Biden administration officials that it was a matter of poor word choice and not a policy change and sought U.S. help in reassuring the Palestinians and Jordanians.