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American citizens have been aware that their children, if born in Jerusalem, whether in West or East Jerusalem, are not recognized by the US State Department as being born in Israel. Their birth certificates and subsequently, their passports, will list "place of birth" simply as "Jerusalem", a seemingly stateless location.
Due to the fact that there are eight "Jerusalems" in the US, one in New Zealand and another in England, this policy is very confusing and imprecise.
As the U.S. Department of State Foreign Affairs Manual Volume 7 – Consular Affairs 7 FAM 1300 Appendix D notes:
"For a person born in Jerusalem, write JERUSALEM as the place of birth in the passport. Do not write Israel, Jordan or West Bank for a person born within the current municipal borders of Jerusalem...For persons born after May 14, 1948 in a location that was outside Jerusalem’s municipal limits and later was annexed by the city, it is acceptable to enter the name of the location (area/city) as it was known prior to annexation."
The background to this is that as a result of the June 1967 Arab-Israeli War, Israel is considered to occupy territories whose final status must be determined by negotiations. This includes all of Jerusalem.
However, regarding births in any of the Arab towns or Jewish communities, the rules read "The birthplace for people born in the West Bank or in the No Man's Lands between the West Bank and Israel is WEST BANK...Those born in 1948 or later may have their city of birth as an alternate entry."
This situation, protest Jewish Americans living in the area, is illogical. The "West Bank" never existed as a geo-political entity until 1950, when Jordan annexed the area. That annexation was never recognized by the United States. Moreover, the place names used by the British Mandate as well as by the United Nations in its 1947 Partition Resolution, the same decision the US uses to avoid listing Jerusalem as in Israel, were actually "Judea" and "Samaria. A baby born to American citizens in Shiloh, for example, should be registered as "Shiloh, Samaria".
Complaints about this discriminatory policy have been lodged with the US Consulate-General in Jerusalem.