U.S. and Israel Sign 99-Year Lease for Permanent Jerusalem Embassy Site

The United States and Israel signed a land-allocation agreement on July 1, 2026, formally designating the Allenby Compound in southern Jerusalem as the site for a permanent U.S. Embassy complex. U.S. Ambassador to Israel Mike Huckabee and Israeli Foreign Minister Gideon Sa'ar signed the agreement at the Israeli Ministry of Foreign Affairs. Jerusalem Mayor Moshe Lion also attended the ceremony. Huckabee confirmed at the signing that the land lease runs for 99 years. The symbolic lease payment is $1.

The agreement advances a process anchored in statute and executive action spanning three decades. The Jerusalem Embassy Act of 1995, passed by the 104th Congress, recognized Jerusalem as Israel's capital and directed that U.S. Embassy operations be relocated from Tel Aviv to Jerusalem by May 31, 1999. Every president prior to Trump invoked the Act's national-security waiver to delay the move for more than 20 years. On Dec. 6, 2017, President Donald Trump issued Proclamation 9683, formally recognizing Jerusalem as Israel's capital and directing the State Department to relocate the embassy. The United States officially opened its embassy in Jerusalem on May 14, 2018. That opening, however, used the former U.S. Consulate building as a temporary facility rather than a purpose-built compound. Washington has continued to operate its embassy at that former consulate building in Jerusalem's Arnona neighborhood ever since.

The Allenby Compound carries a dense legal and historical record that figures in ongoing debates over the site's status. The plot sits on the grounds of the former Allenby military base on the outskirts of the Talpiot neighborhood, constructed by the Ottomans and later used by the Israel Defense Forces until the 1990s. Israeli municipal authorities approved the proposal to construct the building on the Allenby compound, bordered by Hebron Road in southern Jerusalem, in 2021. The compound plan includes embassy offices, staff residences, parking, vehicle maintenance, and security structures, with construction estimated to last approximately 10 years. In 2022, Israeli rights organization Adalah asserted that the site had been confiscated under Israel's 1950 Absentees' Property Law and argued that allocating the land for the embassy compound violates Article 46 of the Hague Regulations, which prohibits the confiscation of private property. The State Department has not publicly responded to that specific legal challenge in connection with the current agreement.

The lease structure itself has a prior U.S. government precedent. On Jan. 18, 1989, the United States and Israel signed an earlier land lease and purchase agreement for a plot of land in West Jerusalem, 31,250 square meters in size, also structured as a $1-per-year, 99-year renewable lease. That 1989 agreement predated Trump's recognition but was never acted upon to construct a permanent building. The current agreement formalizes Israel's cabinet decision to allocate the Allenby Compound specifically for the project.

At the ceremony, both principals framed the agreement in terms of bilateral strategic alignment. Huckabee described the project as an "irreversible decision," saying the U.S. would plant its flag "in a massive amount of concrete" in Jerusalem. Sa'ar said the decision to begin work on a permanent embassy makes the initial 2018 relocation "even deeper and more enduring." The signing comes against a backdrop of bilateral friction over U.S. diplomacy with Iran. U.S.-Israeli relations have become strained over a diplomatic push toward a peace deal with Iran, led in large part by Vice President JD Vance.

The agreement draws immediate opposition from Palestinian officials and advocacy groups, who view a permanent U.S. Embassy in West Jerusalem as prejudging the city's final status. Israel considers Jerusalem its undivided capital, while Palestinians seek East Jerusalem as the capital of a future state, a position supported by most countries, which maintain their embassies in Tel Aviv on the grounds that the city's final status must be resolved through negotiation. No construction timeline or cost estimate was announced at the signing. The State Department and the U.S. Embassy Jerusalem press office issued statements confirming the agreement but provided no further detail on procurement, security design, or congressional notification under the Embassy Security, Location, and Design Act.