Netanyahu in settlement warning before Obama talks

Netanyahu was showing no sign of caving in to US demands to halt the construction of new settler homes in east Jerusalem before joining President Barack Obama for a private dinner at 5:30 pm (2130 GMT).

"If the Americans support the unreasonable demands made by the Palestinians regarding a freeze on settlements in east Jerusalem and the West Bank, the peace process risks being blocked for a year," Netanyahu said.

"Relations between Israel and the United States should not be hostage to differences between the two countries over the peace process with the Palestinians," he was quoted as saying by Israeli media.

Netanyahu declared late Monday in a passionate speech to the powerful US-Israel lobby AIPAC that "Jerusalem is not a settlement," spelling out an apparent message of no compromise towards Obama.

Chronology: US-Israeli relations since 1991

The United States has warned that the construction of new Jewish settlements is directly undermining its own credibility as a mediator and efforts to get "proximity" talks started between Israel and the Palestinians.

Underling the delicate nature of the task Obama and Netanyahu face in repairing the US-Israel rift, they will meet in a small room off the Oval Office without even a photo-op.

Netanyahu says he is simply following the policies of all Israeli governments since 1967, when Israel won a war with its Arab neighbors and seized east Jerusalem, which it later annexed.

Israel claims all Jerusalem as its eternal capital. The Palestinians want to make the predominantly Arab eastern sector of the city the future seat of their state.

On Monday, Netanyahu had dinner with Vice President Joe Biden, who reacted angrily when Israel announced the construction of 1,600 new settler homes in east Jerusalem, when he was visiting the country two weeks ago.

The White House described the talks in a statement written in spare language hinting at the depths of disagreement: "They had a productive, candid discussion on the full range of issues in the bilateral relationship."

Deepening the sense of crisis, the Palestinians warned Netanyahu\'s position threatened to destroy hopes for serious peace negotiations.

"What Netanyahu said does not help American efforts and will not serve the efforts of the American administration to return the two sides to indirect negotiations," Palestinian Authority spokesman Nabil Abu Rudeina said.

Secretary of State Hillary Clinton told AIPAC on Monday that Washington had no choice but to condemn Israel over settlements if it wanted to remain a credible Middle East mediator.

Netanyahu\'s visit unfolded as his government was embroiled in another row, this time with Britain, over the use of fake British passports by an Israeli hit squad blamed for killing Hamas commander Mahmud al-Mabhuh in Dubai.

Britain ordered the expulsion of an Israeli diplomat over the affair. Israel, which has denied its spy agency Mossad was to blame, said it was disappointed at the decision.

Netanyahu was also active on Capitol Hill, as Israel\'s staunch allies in the US Congress stepped up pressure on Obama to back off.

Eric Cantor, the number two Republican in the House of Representatives, told AFP that Obama should show he was "serious" about ending the row with Israel by holding a joint press availability at the White House.

Cantor was among lawmakers who met with Netanyahu a few hours before his White House stop.

Despite her criticism of settlements, Clinton told AIPAC that US support for Israel\'s security is "rock solid, unwavering, enduring and forever."

Netanyahu\'s AIPAC speech offered little obvious room for concessions.

Michelle Dunne, of the Carnegie Endowment for International Peace, said Netanyahu\'s speech "wasn\'t conciliatory at all."

US and Israeli differences over Jerusalem had "been swept for many many years under the rug. They\'re not sweeping it under the rug anymore," she said.

Haim Malka of the Center for Strategic and International Studies said the fact that Obama and Netanyahu were to meet indicated that some understanding had been reached over the parameters of Israeli-Palestinian talks.

But he said the "exact parameters of that understanding remain unclear at the moment."

Obama and Netanyahu may agree more on the threat posed by Iran\'s nuclear program, though Israel sees the matter as more urgent than the United States.

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