Israel's Leader Denies Crisis With US

Israel's leader, trying to defuse reports of a crisis with the U.S. over his rejection of President Barack Obama's proposed formula for resuming Israeli-Palestinian peace talks, said Saturday that media accounts of the disagreement have been "blown way out of proportion."

President Barack Obama meets with Prime Minister Benjamin Netanyahu of Israel in the Oval Office at the White House in Washington, Friday, May 20, 2011. (AP Photo/Charles Dharapak)

WASHINGTON – Israel's leader, trying to defuse reports of a crisis with the U.S. over his rejection of President Barack Obama's proposed formula for resuming Israeli-Palestinian peace talks, said Saturday that media accounts of the disagreement have been "blown way out of proportion."

Prime Minister Benjamin Netanyahu had bluntly criticized 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 Obama in the Oval Office on Friday.

On Saturday, Netanyahu stood firm by 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," Netanyahu said.

U.S. President Barack Obama meets with Israel's Prime Minister Benjamin Netanyahu in the Oval Office at the White House in Washington, May 20, 2011. Obama's call for Israel to give Palestinians territory it has occupied since 1967 stunned Netanyahu and pushed the leaders' thawing relationship back into the freezer

In a Mideast policy speech on Thursday, Obama gave unprecedented prominence to Washington's long-held stand on the future borders of Israel and a Palestinian state.

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

AP