Did Netanyahu really mean to reject Palestinian statehood?

Benjamin Netanyahu's allies acknowledged on Sunday that his election-eve disavowal of a Palestinian state had caused a rift with the White House, but blamed U.S. President Barack Obama's unprecedented criticism on a misunderstanding.

The Israeli prime minister pledged on the eve of his re-election victory last week that there would never be a Palestinian state while he is prime minister.

The remarks were widely interpreted as a rejection of the "two-state solution" that has been the basis of decades of talks to end the Palestinian-Israeli conflict, brokered by successive U.S. Republican and Democratic administrations alike.

Since winning re-election, Netanyahu has tried to row back, arguing that he was not rejecting Palestinian statehood in principle, but responding to a reality in which the Palestinian Authority has a political pact with the Islamist group Hamas, under which statehood would be unacceptable.

But Obama said on Friday Netanyahu's comments had made it "hard to find a path" back to serious peace negotiations. He told Netanyahu on Thursday that Washington would have to "reassess" its policies in the Middle East.

Israel's Strategic Affairs Minister Yuval Steinitz, a close Netanyahu ally, acknowledged the problem but pointed the finger at Washington for failing to understand the prime minister's position.

"If the Americans are finding it difficult to understand or accept our clarifications (on Palestinian statehood), this is certainly worrying and requires tending to," he told Israel Radio. "He (Netanyahu) didn't say this (statehood) is 'unacceptable'. He said reality has changed."

Israel's close alliance with the United States has been a fundamental pillar of its security throughout its 67 year history, and Netanyahu's political foes have accused him of jeopardizing it.

Paying a price

Netanyahu has long had a difficult relationship with Obama, and made it worse two weeks before the election by addressing the U.S. Congress at the invitation of opposition Republicans to condemn the administration's nuclear negotiations with Iran.

Amos Yadlin, a former chief of Israeli military intelligence aligned with the center-left Zionist Union which lost the vote to Netanyahu, said Israel would "pay a price" for Netanyahu's remarks on statehood, which had caused "fury" in Washington.

"I'm not among those who panic: I don't think the United States will impose sanctions on Israel. But I see places in which it will go much harder for us," said Yadlin, who returned a day earlier from a visit to the U.S. capital. "Firstly, they used a word that they haven't used since 1975 - 'reassessment', a reassessment of relations."

President Reuven Rivlin began the formal process on Sunday of consulting political parties to nominate a candidate to form a governing coalition, largely a foregone conclusion after Netanyahu's victory.

Netanyahu, leader of the right-wing Likud party, is likely to be given the nod as early as Wednesday to start what could be up to 42 days of negotiations with potential cabinet partners. He is expected to build a coalition with far-right, religious and centrist parties, on course to becoming Israel's longest-serving prime minister.

His comments on a Palestinian state were part of a hard rightward tack that helped deliver the election victory after polls predicted he would lose to the center-left Zionist Union.

Obama also took Netanyahu to task for an Internet post on the day of the election in which the prime minister urged right-wing supporters to vote because Arab Israelis were doing so in large numbers.

Netanyahu publicly embraced an independent state for Palestinians in a speech in 2009, but Palestinians have long questioned his sincerity, noting his expansion of Israeli settlements on occupied land. Palestinian President Mahmoud Abbas called Netanyahu's latest comments "very worrying."

With no peace talks under way, the Palestinians have taken steps to seek international recognition of their independence unilaterally. So far most Western countries have held back from diplomatic recognition, arguing that a Palestinian state should emerge from negotiations with Israel.

Washington has long used its veto in the U.N. Security Council to prevent the United Nations from taking steps to recognize Palestinian independence. Some in Israel are concerned that Obama's "reassessment" could jeopardize that stance.

Silvan Shalom, a Likud cabinet minister, said Israel would have little incentive to seek a peace deal if the United States and other countries "lend a hand" to unilateral Palestinian moves. If that happens, he told Army Radio, "then what is the point of signing another (peace) accord?"

(Additional reporting by Dan Williams; Editing by Peter Graff)