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With U.S.-Israel ties strained, Obama may make bold move

WASHINGTON — After 14 months of frustration over the moribund Mideast peace process and nearly three weeks of open confrontation with Israeli Prime Minister Benjamin Netanyahu, President Barack Obama shows no sign of backing down — and may be about to double his bets.

The clash began when Vice President Joe Biden visited Jerusalem on March 9 and Israel announced construction of 1,600 new apartments for Jews in disputed East Jerusalem. Biden condemned the decision, and Obama's top aides publicly dressed down Netanyahu for a step they called "insulting."

Hoping to capitalize on Israel's embarrassment, the administration sought concessions on Jewish settlements and other issues to set the stage for renewed talks with the Palestinians.

That, too, didn't work. This past week, first Obama, then his aides held closed talks with Netanyahu at the White House for two days running. No reporter was allowed near the talks, no joint appearances were made and no statements were released afterward.

An Israeli newspaper commented that Netanyahu had been treated as if he were the leader of Equatorial Guinea.

Obama, fresh from his legislative victory on health care, is planning an attempt to turn the current disaster into a diplomatic opportunity, according to U.S. officials, former officials and diplomats.

The administration is said to be preparing a major peace initiative that would be Obama's most direct involvement in the conflict to date, and would go far beyond the tentative, indirect Israeli-Palestinian talks that were torpedoed earlier in the month.

"It is crystallizing that we have to do something now. That this can't go on this way," said one of the officials who, like the others, wouldn't speak for the record because of the issue's sensitivity.

Because of the U.S. political calendar, Obama has limited time to press Israel before it becomes a major domestic political issue during midterm elections. Netanyahu, who this weekend confers with his closest allies, has limited political space in which to operate, if he wants to stay in power.

His coalition at home is populated with Israeli politicians who support Jewish settlements in the West Bank, oppose any concessions on Jerusalem and are skeptical of an independent Palestinian state next door.

One irony of the current confrontation is that the administration, which had laboriously organized indirect talks between Israel and the Palestinians, had planned to use Biden's visit to provide "strategic reassurance" to Israel, in hopes of improving relations with the closest U.S. ally in the Middle East after a year of strains.

Now, trust between the two sides seems to be at a very low ebb.

"There's not a great deal of trust that he believes deeply in the two-state solution," a former senior U.S. official in touch with the White House said of Netanyahu. "There's a belief that he's a reluctant peacemaker here."

The Obama administration is said to believe that Netanyahu has more control over Jewish settlements than he admits, and political flexibility to dump his right-wing partners and form a government with the moderate Kadima party if he chose.

"Fundamentally, he's going to have to decide between his coalition and his relationship with the United States," the former official said.

From the day of his inauguration and his first major appointment — former Senate Majority Leader George Mitchell of Maine as his special Middle East envoy, efforts by Obama, Secretary of State Hillary Clinton and Mitchell have been a study in frustration.

Netanyahu turned aside a U.S. demand last year for a comprehensive settlement freeze, offering a 10-month moratorium that excluded East Jerusalem. Even under President George W. Bush, whose interest was episodic, Israeli and Palestinian leaders held direct talks. Obama has struggled just to start "proximity talks," in which U.S. mediators would shuttle between the two sides.

So American anger was white-hot when the March 9 announcement left the proximity talks stillborn.

Mitchell, who labored for months during frequent Mideast shuttles "is a patient man. . . . but this has to be aggravating," one State Department official said.

Senior U.S. officials are said to debate whether the unveiling of the 1,600 new apartments at Ramat Shlomo was a deliberate attempt by Netanyahu to avoid peace negotiations, or merely symptomatic of his tenuous control over his own government. The Interior Ministry is run by the ultra-orthodox Shas party.

Either conclusion bodes poorly for Obama's attempts at diplomacy. Israeli officials say Netanyahu was as blindsided by the announcement as Biden was.

On Friday, March 12, Clinton and Netanyahu spoke by phone in a tense conservation, in which the secretary of state relayed U.S. anger at the move in Ramat Shlomo. She demanded that Israel take steps to revive hopes for peace.

The U.S. government has declined to list them, but they're said to include an end to provocative moves in East Jerusalem; removing checkpoints and otherwise easing conditions on the West Bank; and agreeing to immediately negotiate core disputes with the Palestinians.

Clinton and Netanyahu were both keenly aware that they were scheduled to speak on March 22 in Washington at the annual conference of the powerful Jewish-American lobby, the American Israel Public Affairs Committee.

Netanyahu called Clinton, who was in Moscow, on March 18 and delivered his response to the American demands. Israeli officials say he insisted that the Palestinians had to make concessions too, not just Israel.

Publicly, the administration moved to tone down the rhetoric, and meetings were arranged with Clinton and Obama, who had canceled an Asia trip to be in Washington for the health care vote.

Netanyahu's speech at AIPAC gave no ground. He declared: "Jerusalem is not a settlement; it's our capital" and described a limited U.S. role in the peace talks. The next morning, he went to Capitol Hill, where Democrats and Republicans alike showered him with promises of support for Israel.

It looked for a moment like the Israeli prime minister had weathered the storm.

At the White House, however, distrust of Netanyahu ran deep. Maps were prepared, showing how Israel had all but encircled Jerusalem's Old City with Jewish settlements and even religious theme parks — "facts on the ground" that would preclude a peace deal. Palestinians also claim the city as their capital.

By all accounts, the White House meetings went badly, both in substance and tone, as the Obama team pressed Netanyahu to make concessions on Jewish settlements and other issues. Netanyahu balked at some of the requests, which the administration hasn't made public.

Now, the ball is in his court.

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