Binyamin Netanyahu told the pro-Israel lobby dinner: "Jerusalem is not a settlement, it's our capital"
Israel's relations with the US reached a crisis point yesterday as Binyamin Netanyahu, the Prime Minister, threatened a year-long delay in the resumption of Middle East peace talks hours before a tense meeting with President Obama at the White House.
Mr Netanyahu, who laid claim to parts of east Jerusalem in a defiant speech in Washington on Monday night, warned that if Palestinian leaders maintained their demand for a full freeze on new Israeli settlements "it could put the peace negotiations on hold for another year".
For the second time in less than six months Mr Obama and the Israeli Prime Minister met out of sight of the press — a clear signal, officials admitted, that one of America's most important bilateral relationships has reached a state of critical disrepair.
Analysts speculated that Mr Netanyahu might be ready to offer private concessions such as a promise to slow the planning process for the construction project, whose announcement last week wrecked a visit to Israel by Vice-President Joe Biden. Yet there was little sign of conciliation as the Israeli delegation toured Congress drumming up support for a position on settlements that is diametrically opposed to that of the US Administration.
Efforts to repair the relationship were not helped by reports last night in the Israeli media that approval was being given to build 20 apartments for Jewish settlers at the site of a former Palestinian hotel in east Jerusalem.
In a speech to America's most powerful pro-Israel lobby on Monday night, Mr Netanyahu ridiculed opposition to Israeli construction in east Jerusalem even though it has been a central plank of the Obama Administration'
Referring to districts considered part of east Jerusalem, which Palestinians claim for their capital, Mr Netanyahu said "everyone knows that these neighbourhoods will be part of Israel in any settlement, therefore building in them in no way precludes a two-state solution".
Hillary Clinton had warned the same audience that new construction undermined mutual trust between Israelis and Palestinians and "exposes daylight between Israel and the US that others in the region hope to exploit". When the Secretary of State met Mr Netanyahu afterwards, the venue was switched at the last minute to his hotel suite, where the press could be excluded. Mr Netanyahu later had a "productive, candid discussion" over dinner with Mr Biden — diplomatic language for a conversation that may have brought their relationship back from the nadir it reached in Jerusalem but has still left the US and Israel farther apart than in decades.
The spectacle of drift in the peace process and longstanding allies unable to be seen together was seized on by Republicans. "The President should be taking every opportunity to stand up publicly and reaffirm that we stand with our ally Israel," said Eric Cantor, the only Jewish Republican member of the House of Representatives.
Martin Indyk, a former US Ambassador to Israel, held out hope that Israel and the White House would find common ground on Iran and calm frayed tempers over east Jerusalem. "You have to read between the lines. When \ beats his chest he's talking about the Jewish suburbs of east Jerusalem, not the Arab ones," Mr Indyk said.
The path to last night's meeting was not smoothed by Mr Netanyahu's brother-in-law, Hagai Ben-Artzi, who called Mr Obama an anti-Semite on Israeli radio last week; nor by reports that the Prime Minister himself has referred to David Axelrod and Rahm Emanuel, both senior White House staff, as "self-hating Jews". He has denied the reports.
The Aipac annual dinner traditionally gives pro-Israel hawks their most sympathetic US audience. but it does not speak for the whole Jewish lobby. J Street, a liberal Jewish think-tank established last year, took out a full-page advertisement in Monday's New York Times to declare: "It's time for Israel to stop allowing extremist settlers and their sympathisers to endanger not only the friendship of the United States but also the very future of Israel."
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