Netanyahu voices regret in settlement row with US

Jerusalem–Israeli Prime Minister Benjamin Netanyahu voiced regret Sunday for the announcement of a Jewish settlement plan that has strained ties with Washington and threatens the revival of Middle East peace talks.

In his first public remarks on what Israeli commentators called his most serious crisis with Washington since taking office a year ago, he gave no sign he would meet Palestinian demands to cancel a project for 1600 new settler homes.

"I suggest not to get carried away and to calm down," Netanyahu told his cabinet at its weekly meeting, after a reprimand by US Secretary of State Hillary Clinton.

"There was a regrettable incident here, that occurred innocently," Netanyahu said, referring to an announcement by a government ministry during a visit last week by US Vice President Joe Biden, of planned construction in an area of the West Bank that Israel has annexed to Jerusalem.

The timing of the disclosure deeply embarrassed Biden, whose visit coincided with Palestinian agreement to restart peace talks suspended since December 2008 in the form of indirect, US-mediated negotiations with Israel.

"It was hurtful and certainly it should not have happened," Netanyahu said of the announcement by the Interior Ministry, controlled by the pro-settler, ultraorthodox Shas party, a partner in his governing coalition.

Netanyahu said he had appointed a team of senior officials "to pinpoint the sequence of events, to ensure procedures will be in place to prevent these kinds of incidents in the future."

Clinton reprimand

A senior US official forecast "a dicey period here in the next couple days to a couple of weeks" as Palestinians demanded the reversal of the settlement plan.

Palestinians fear settlements on land Israel captured in the 1967 Middle East war will deny them a viable state in the West Bank and Gaza Strip.

In unusually blunt remarks, Clinton called Israel’s behavior "insulting" after it approved the project while hosting Biden.

Although she stressed Washington’s ties with the Jewish state were "durable and strong," she told Netanyahu in a telephone call Friday he must act to repair the relationship.

Clinton accepted that Netanyahu was taken by surprise by the settlement housing approval. However, her spokesman said she told him it was a "deeply negative signal about Israel’s approach to the bilateral relationship … and had undermined trust and confidence in the peace process."

Israel’s ambassador to the United States, Michael Oren, was summoned to the State Department Friday to meet Deputy Secretary of State Jim Steinberg in a further sign of US displeasure, a senior US official said.

US President Barack Obama is seeking better US relations with the Arab world, which backs the Palestinians, as he seeks to bolster alliances in the oil-producing region, notably against Iran as it develops nuclear technology and against Islamist enemies such as Al-Qaeda.

Aides to Palestinian President Mahmoud Abbas said he was waiting to meet Obama’s peace envoy, George Mitchell, when he returns to the region in the coming days before deciding whether to go ahead with the "proximity talks."

A senior US official indicated that Washington might focus on playing down the significance of the past week’s approval for future house building–"this was a year away at minimum," he said–and expressing understanding for Netanyahu’s difficulties.

The official described the prime minister’s position as "perilous" because of his coalition’s dependence on pro-settler groups.

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