WASHINGTON -- Secretary of State Hillary Rodham Clinton and Israeli Prime Minister Benjamin Netanyahu presented dueling positions on Jerusalem construction Monday, underlining a recent spat between the allies while simultaneously suggesting the incident is behind them.
Israel recently announced new housing plans for east Jerusalem, the part of the city Palestinians want for a future capital, drawing unusually sharp criticism from the Obama administration. Clinton renewed that disapproval on Monday, telling a pro-Israel audience that provocative Israeli land policies in areas claimed by the Palestinians are not in Israel's long-term interests and undermine U.S. credibility as a mediator.
Speaking later in the day to a crowd of nearly 8,000 pro-Israel activists at the same forum, the American Israel Public Affairs Committee, including hundreds of congressmen and senators, Netanyahu did not budge from his position that building anywhere in Jerusalem is an Israeli right.
But at the same time both sides appeared to be indicating that while differences may remain, the spat -- unique in recent memory for its harsh rhetoric and public nature -- should not be allowed to further mar ties or delay the launch of Israeli-Palestinian peace talks.
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 in her speech, 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 criticized Palestinian incitement to violence.
President Barack Obama has remained out of the fray as Clinton and other U.S. officials have rebuked Israel for its announcement of new construction in Jerusalem, which came while Vice President Joe Biden was visiting the country. It embarrassed Biden, a staunch supporter of Israel, and led to new stress in relations between Washington and its top Middle Eastern ally.
Obama agreed to see Netanyahu on Tuesday at the White House -- Obama's first meeting with the Israeli leader since the severe diplomatic breach over the housing announcement this month. But it will be closed to reporters, an unusual choice when hosting a close ally and a sign that suggested the rift may not be entirely healed.
"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," Clinton 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 U.S. role as mediator.
The AIPAC crowd responded with notably more enthusiasm to Netanyahu's assertion that Jews had been building in Jerusalem for 3,000 years and that Israel would continue to do so.
"Jerusalem is not a settlement. It's our capital," Netanyahu said to a prolonged standing ovation.
The neighborhoods Israel has built in east Jerusalem are an "inextricable" part of the city, the Israeli leader said, and will remain part of Israel under any peace agreement.
"Therefore, building in them in no way precludes the possibility of a two-state solution," he said. Israel does not want to rule over Palestinians, he said, while calling on Palestinian leaders to begin talks.
But despite the clashing positions, Israel and the U.S. both appeared to signal that the spat should not further delay Israeli-Palestinian peace negotiations.
In her speech, Clinton assured Israel that the U.S. administration's commitment to its security and future is "rock solid." And after she met the Israeli leader Monday, Israeli officials termed the talks "friendly" and said both the United States and Israel were interested in leaving the rift behind and getting talks started quickly. A statement from the State Department also said the goal was to "move to direct negotiations as soon as possible."
Clinton said talks with Netanyahu on action Israel can take to restore confidence were under way.
Some Israeli officials say that while there will be no formal building freeze, construction may be restricted, as in a partial 10-month West Bank construction freeze that Netanyahu has already enacted.
The steps have not been made public, but officials say another element is agreement to discuss all outstanding issues in the indirect talks that the United States is to mediate. Those would include the future of Jerusalem, borders, Jewish settlements and Palestinian refugees.
Clinton got loud approval when she talked tough on Iran -- an issue on which there is more agreement between Israel and the United States. Both countries believe that Iran wants nuclear weapons, that it could be able to develop them soon and that such weapons would pose a grave threat. The secretary said the Obama administration would not accept a nuclear armed Iran and is working on sanctions "that will bite" as a deterrent.
In his speech, Netanyahu said that should Iran obtain nuclear weapons, "Our world would never be the same."