Secretary of State Hillary Rodham Clinton has accused Israel of undermining US credibility as a Mideast peacemaker on the eve of critical talks between President Barack Obama and Prime Minister Benjamin Netanyahu.
Israel recently announced new housing plans for east Jerusalem, an expansion that the Obama administration has strongly criticized. Clinton renewed that disapproval, telling a pro-Israel audience that provocative Israeli land policies in areas claimed by the Palestinians are not in Israel's long-term interests.
Nonetheless, Netanyahu planned to take a firm stand regarding Jerusalem, stressing in a speech that the city is Israel's capital, "not a settlement," government spokesman Mark Regev said.
At the same time both sides appeared to be indicating that while differences may remain, the recent spat - unique in recent memory for its harsh rhetoric and public nature - was behind them.
In her speech, Clinton assured Israel that the US administration's commitment to its security and future is "rock solid." And after she met the Israeli leader, Israeli officials termed the talks "friendly" and said both the US and Israel were interested in leaving the rift behind and getting Israeli-Palestinian peace talks started quickly.
The officials spoke on condition of anonymity because Israel did not publicly release information on the meeting.
State Department spokesman P.J. Crowley said the two discussed "the specific actions that might be taken to improve the atmosphere and keep proximity talks moving forward."
"Our focus remains creating an atmosphere of trust so that the parties can begin to address core issues" through a US intermediary and then move to face-to-face negotiations.
Netanyahu was to speak to the American Israel Public Affairs Committee, which Clinton addressed earlier.
The spread of Jewish homes on land claimed by the Palestinians threatens the Obama administration's first attempts at shuttle diplomacy intended to establish an independent Palestinian state, Clinton said, and makes it hard for the United States to be an honest broker.
"Our credibility in this process depends in part on our willingness to praise both sides when they are courageous, and when we don't agree, to say so, and say so unequivocally," Clinton said.
She also criticised Palestinian incitements to violence.
Obama has remained out of the fray as Clinton and other US officials have rebuked Israel for a particularly large housing announcement that seemed timed to embarrass the United States and perhaps to smother the new talks with a US go-between before they began.
The talks would be the first formal peace efforts since election of a Democratic administration in Washington and a hawkish one in Israel.
A meeting at the White House will be Obama's first with the Israeli leader since the severe diplomatic breach over the housing announcement earlier this month.
It will be closed to reporters, an unusual choice when hosting a close ally and a sign that suggested the rift may not be healed.
"We objected to this announcement because we are committed to Israel and its security, which we believe depends on a comprehensive peace," Clinton said.
Palestinians claim that the expansion is a land grab that will be impossible to roll back, leaving them less space and less desirable outlines for a future state alongside Israel.
"New construction in east Jerusalem or the West Bank undermines mutual trust and endangers the proximity talks that are the first step toward the full negotiations that both sides want and need," she said.
"It exposes daylight between Israel and the United States that others in the region hope to exploit," and undermines what she called an essential US role as mediator.
The Israeli announcement came while Vice President Joe Biden was visiting the country. It embarrassed Biden, usually a staunch supporter of Israel, and led to new stress in relations between Washington and its top Mideast ally.
Clinton said talks with Netanyahu on steps Israel can take to restore confidence were under way.
Netanyahu has outlined some steps his government is willing to take, but he said on Sunday that Israel would not halt construction in Jewish neighborhoods in east Jerusalem.
Some Israeli officials say that while there will be no formal freeze, construction may be restricted, as in Netanyahu's partial 10-month West Bank construction freeze.
The steps have not been made public, but officials say another element is agreement to discuss all outstanding issues in the proximity talks that the US is to mediate. Those would include the future of Jerusalem, borders, Jewish settlements and Palestinian refugees.
Clinton got a polite but muted response to most of her remarks, and loud approval when she talked tough on Iran - an issue on which there is more agreement between Israel and the US
The secretary said the Obama administration would not accept a nuclear armed Iran and is working on sanctions "that will bite" concerning its suspect atomic program.
Clinton said parts of Iran's government are "a menace" to the Iranian people and the Middle East. Israel considers Iran a mortal threat in its back yard, especially since the development of better Iranian missiles and the advancement of Iran's nuclear program to the point where a weapon could be feasible.
Iran says it is not building a weapon.
