- Associated Press - Sunday, May 22, 2011

WASHINGTON (AP) — Israel‘s leader, trying to defuse reports of a crisis with the United States over his rejection of President Obama’s proposed foundation for future Israeli-Palestinian peace talks, said Saturday that media accounts of the disagreement have been “blown way out of proportion.”

Prime Minister Benjamin Netanyahu bluntly criticized Mr. Obama’s call earlier this week to base future negotiations on Palestinian statehood on Israel‘s boundaries before it captured the West Bank, east Jerusalem and the Gaza Strip in the 1967 Mideast war. He publicly reiterated that opposition while sitting beside Mr. Obama in the Oval Office on Friday.

On Saturday, Mr. Netanyahu stood firm in his insistence that Israel could not withdraw to its prewar lines, negotiate with a Palestinian government including violently anti-Israel Hamas militants or repatriate millions of Palestinians to homes in Israel that they or their families fled or were driven from during the fighting over Israel‘s 1948 creation.

But he told the Associated Press that media accounts of the disagreements “have been blown way out of proportion.”

“It’s true we have some differences of opinion, but these are among friends,” Mr. Netanyahu said.

“There should be no doubt about the strength of the American-Israeli relationship and President Obama’s commitment to Israel and its security,” he added.

In a Mideast policy speech on Thursday, Mr. Obama gave unprecedented prominence to Washington’s long-held stand on the future borders of Israel and a Palestinian state in the West Bank, Gaza and east Jerusalem. Although his comments did not differ substantively from previously articulated U.S. positions, he sent shudders through the Israeli leadership by acceding to Palestinian pressure to explicitly enunciate this stance.

An essential part of what Mr. Obama proposed was that Israelis and Palestinians also would have to agree to land swaps that would allow Israel to hold on to major Jewish settlements, a point Mr. Netanyahu failed to mention when he declared the 1967 lines to be militarily “indefensible.”

From the very first days of his presidency, Mr. Obama has been pushing hard to wring an elusive peace agreement from Israel and the Palestinians, who stopped negotiating in late 2008, save a brief period this past September.

The Palestinians have not yet indicated whether his public statement on their hoped-for state’s borders would be enough to bring them back to the negotiating table and drop their campaign to have the United Nations recognize their state unilaterally in September, a move both the United States and Israel oppose.

The Palestinians have refused to talk to Israel as long as it continues to build homes for Jews in east Jerusalem and the West Bank. Israel has refused to reinstate and expand a 10-month settlement construction slowdown that expired in late September.

In the meantime, the two sides are mired in mutual distrust and divided by more than just the border dispute. Should they ever return to the negotiating table, even bigger problems loom with regard to resolving disputes over the status of contested Jerusalem and a solution for the refugees.

Mr. Netanyahu has said he would not share Jerusalem with the Palestinians, who want the eastern sector of the holy city for the capital of a future state. No Israeli government has been willing to consider anything but a token repatriation of Palestinian refugees for fear a mass return would dilute the Jewish character of the state.

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