“Friends are going to disagree sometimes," Obama said, but America and Israel “have a special bond that's not going to go away.” Indeed, both sides want to patch up relations following a series of vitriolic rhetoric that touched off the worst US-Israeli row in decades.
Washington is trying to give a new impulse to the Mideast peace process. However, Israel continues to hold on to its hard-line position on settlements at a time of renewed clashes between Palestinians and Israeli police, growing fears of a third intifada and US indecision. All this has contributed to a widening gap between the United States and Arab nations, who are key players in containing Iran’s nuclear threat.
Israeli Prime Minister Benjamin Netanyahu has distanced himself from an attack on Mr Obama by his brother-in-law, Hagai Ben-Artzi, who accused the US leader of being anti-Semitic. Mr Netanyahu insisted that he “strenuously” objected to his brother-in-law's comment and expressed his "deep appreciation" for Mr Obama's commitment to Israel's security.
Speaking on the Fox News Channel, Mr Obama said on Wednesday that the new settlement homes were "not helpful" for reaching a peace agreement between Israel and Palestine.
Israel announced the Jewish settlement expansion as US Vice-President Joe Biden arrived for a visit last week, causing a major row between Washington and its historic ally. However, Obama noted, “Israel is one of our closest allies and we and the Israeli people have a special bond that's not going to go away.”
The US administration and Obama now appear to be backing down from the demand made early in the president’s term that Jewish settlements in the Territories be stopped.
Palestinian authorities have indicated that they are not prepared to take part in any direct peace talks so long as Israel expands its settlement plans.
Close to 500,000 Jews live in more than 100 settlements, illegal under international law, which Israel built since it occupied the West Bank and East Jerusalem in 1967.
Obama has appealed to Israelis and Palestinians to take the necessary steps to rebuild confidence. Many fear that the current tensions will accentuate the atmosphere of anti-Americanism that prevails in the Middle East, a view confirmed by General David Petraeus, top US military commander in the region.
“Arab anger over the Palestinian question limits the strength and depth of US partnerships with governments and peoples,” he said.
Paul Salem, director of the Carnegie Middle East Center in Beirut, said Arab countries will be less likely to engage with the United States on issues such as Iran if they get nothing in return.