JERUSALEM (March 15) -- Israelis woke up this morning to banner headlines trumpeting "the worst crisis in relations with the U.S. for 35 years," quoting Israel's ambassador to Washington, Michael Oren.
His comments reportedly came in a telephone call to several Israeli consuls general Saturday night. Israeli officials are not commenting, but the statement was reported in the Ha'aretz newspaper and Israel's largest-circulation daily, Yedioth Ahronoth, and Oren has not denied it.
"Never before has there been such a lack of trust between an Israeli leader and an American president," Hirsh Goodman of the Institute for National Security Studies said in an interview with AOL News. "That's why President Obama set down a series of guidelines, which Israel agreed to. And one of those guidelines was: No surprises when it came to settlement expansion."
Prime Minister Benjamin Netanyahu of Israel and Vice President Joe Biden walk in Jerusalem last week. During the vice president's visit, Israel announced the country's plan to build new homes in East Jerusalem. The proclamation has sparked a diplomatic fiasco between the two nations.
Yet last week while Vice President Joe Biden was in Jerusalem, Israel's district planning commission announced that Israel will build 1,600 new homes in Ramat Shlomo, an ultra-Orthodox settlement in East Jerusalem. The decisions sparked a wave of very public reprimands of Israel.
Prime Minister Benjamin Netanyahu gave a half-apology Sunday, saying the timing was "harmful" and appointed a commission to study how it happened. But he did not rescind the decision as Secretary of State Hillary Clinton has demanded, according to Ha'aretz.
Today, speaking to his Likud faction in the Knesset, Netanyahu said: "We have been building in Jerusalem for 42 years," implying that Israel will continue building in East Jerusalem, which Israel unilaterally annexed in 1967.
Palestinians say East Jerusalem must be the future capital of a Palestinian state, and the U.S. position has consistently been that the future of Jerusalem must be determined by negotiations between Israel and the Palestinians. In fact, Biden was in the region to push the start of shuttle diplomacy between Israel and the Palestinians after a 14-month freeze in talks.
The crisis has hit Netanyahu hard just a year after taking office.
Netanyahu is trying to "both embrace Vice President Joe Biden and give the U.S. administration the finger, to both ask the administration to get (Palestinian President) Mahmoud Abbas back to the negotiating table and put thumbtacks on his seat once he's there," an editorial in Ha'aretz said.
Ha'aretz, which is known for its dovish views, also had a stern warning for the prime minister.
"Israel is not America's strategic asset, but America is the source of Israel's strength, and it is essential to rein in the lunacy that threatens to shatter the link between the two countries."
Netanyahu is caught between his hard-line coalition and his efforts to renew the peace process. The district planning commission is under the control of Interior Minister Eli Yishai of the ultra-Orthodox Shas party. It is no coincidence that the new homes to be built are for ultra-Orthodox young couples.
There have been other rough patches with the United States in the past, especially over the issue of settlement construction. But this time, the tone seemed especially harsh.
"What happened there was an affront -- it was an insult," White House senior adviser David Axelrod told ABC's "This Week." He also said it seemed timed to undermine the resumption of peace talks.
The public recriminations of Israel have been going on for almost a full week now. And there is no sign that this crisis is over.
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