July 23, 2009 - 12:00am

There is no crisis in relations between Israel and the United States, despite a lingering dispute - which will be settled "soon" - over settlement construction in the West Bank, Israel's new ambassador to Washington said Wednesday.

But a highly respected Tel Aviv think tank said the two countries could be on a "collision course" unless Israel undertook practical measures to back up its statements that it wanted peace with the Palestinians.

There is no crisis in Israel-U.S. relations. Here we are talking about disagreements over certain subjects, very, very specific," Ambassador Michael Oren told Israel Radio.

The State Department summoned Oren over the weekend to ask for clarifications over an Israel plan to construct housing units on the site of a defunct hotel in East Jerusalem.

In response, Oren told the State Department that Israeli construction in East Jerusalem was no different than in any other part of the country. Netanyahu said the following day that Israel's sovereignty over Jerusalem was "indisputable" and that he would not allow citizens to be forbidden property purchases in any part of the city.

Oren said there was "goodwill" between the two countries in attempting to solve the dispute.

"I am sorry to disappoint, but there is no crisis," Oren added. "We are talking about an extremely deep alliance (between Israel and the U.S.)"

But the Institute for National Security Studies, a Tel Aviv-based think tank, said Wednesday afternoon that Netanyahu's recent qualified and conditional commitment to the establishment of a Palestinian state may not be enough to avert a clash with Washington, unless it "substantiates its desire to settle its conflicts with the Arab world with practical measures."

Presenting its annual Israeli strategic survey, the INSS said a stalemate on the Israeli-Palestinian issue "is the potential for tensions between the United States and Israel."

Israel, a summary of the survey said, had to formulate a strategy for negotiations with the Palestinians and with Syria and had to establish a "constructive exchange" with the U.S. on how to deal with Iran's nuclear ambitions.

Possible regional developments, such as the withdrawal of U.S. forces from Iraq or challenges to moderate Arab regimes, could force Israel to grapple with new threats and sources of instability, the institute said.

Earlier Wednesday, United Nations Secretary-General Ban Ki-moon also urged Israel to freeze all forms of settlement activity.

"I urge the government of Israel to commit fully to its obligations, including to freeze settlement activity and natural growth," said Ban in a message to a United Nations meeting in Geneva on the Middle East.

"If Israel continues settlement activity, it will not only be acting contrary to international law but also to a strong international consensus," he said.

In his message on Wednesday, Ban said that an agreement by Israel to freeze settlement activity would "facilitate a new environment of cooperation and common purpose from the countries in the region."

The international community considers Jewish neighborhoods in the east of the city to be settlements and an obstacle to Israeli-Palestinian peacemaking. The European Union and Russia this week warned Israel that activity there was destroying the peace process.

Israel regards communities in East Jerusalem, annexed during the 1967 Six-Day war, to be a legitimate part of the state and views with distinction that area from the West Bank.

The U.S., on the other hand, claims it has made clear to Netanyahu that it sees East Jerusalem as an issue that should be left to "permanent status" negotiations, and has said any activity there could prejudice a final agreement between Israel and the Palestinians.


American Task Force on Palestine - 1634 Eye St. NW, Suite 725, Washington DC 20006 - Telephone: 202-262-0017