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Secretary of State Hillary Rodham Clinton rebuked Israeli Prime Minister Binyamin Netanyahu on Friday about the state of the U.S.-Israeli relationship, demanding that Israel take immediate steps to show it is interested in renewing efforts to achieve a Middle East peace agreement.

State Department spokesman P.J. Crowley described the nearly 45-minute phone conversation in unusually undiplomatic terms, signaling that the close allies are facing their deepest crisis in two decades after the embarrassment suffered by Vice President Biden this week when Israel announced during his visit that it plans to build 1,600 housing units in a disputed area of Jerusalem.

Clinton called Netanyahu “to make clear the United States considered the announcement a deeply negative signal about Israel’s approach to the bilateral relationship and counter to the spirit of the vice president’s trip,” Crowley said. Clinton, he said, emphasized that “this action had undermined trust and confidence in the peace process and in America’s interests.”

From the start of his tenure, President Obama identified a Middle East peace deal as critical to U.S. national security, but his efforts have been hampered by the administration’s missteps and the deep mistrust between the Israelis and the Palestinians. Last fall, he softened his demand for a full freeze on settlement construction, accepting a limited 10-month moratorium that did not include the East Jerusalem area where the construction announced this week is to take place. Clinton at the time hailed the Israeli plan as “unprecedented.”

Special envoy George J. Mitchell has struggled to relaunch peace talks between the Israelis and the Palestinians. Last week, he got the two sides to agree to indirect talks, with Mitchell shuttling between them, but the Israeli announcement has imperiled that development. Rising Palestinian anger led Israeli forces on Friday to seal off the West Bank and post riot squads around Jerusalem’s Old City and Arab neighborhoods.

U.S. officials were especially furious about the announcement because they thought they had reached a private understanding with Netanyahu that even though East Jerusalem was not officially included in the moratorium, he would prevent any provocative actions there. Its release during Biden’s trip, intended as a fence-mending mission, was seen as another slap.

“The announcement of the settlements on the very day that the vice president was there was insulting,” Clinton told CNN on Friday.

Obama had approved Clinton’s call, sitting down with her during their weekly meeting Thursday to determine the language she would use. “The secretary and the president worked through together the specific points she would be making to Prime Minister Netanyahu,” deputy national security adviser Ben Rhodes said. Biden also called Netanyahu on Friday to reinforce the message, officials said, and Israeli Ambassador Michael Oren was summoned to a meeting with Deputy Secretary of State James B. Steinberg.

Some analysts applauded the administration’s tough stance, saying it may jar the right-leaning Israeli government into making gestures to the Palestinians. But others said Clinton’s call risked emboldening Arab and Palestinian officials to make new demands before talks start, if only so as not to seem softer than the Americans.

In her call, Clinton appeared to link U.S. military support for Israel to the construction in East Jerusalem, which Palestinians view as the site for their future capital. “The secretary said she could not understand how this happened, particularly in light of the United States’ strong commitment to Israel’s security,” Crowley said. “She made clear that the Israeli government needed to demonstrate, not just through words but through specific actions, that they are committed to this relationship and to the peace process.”

U.S. officials said Clinton made specific requests of Netanyahu to get the peace process back on track and to repair the damage to the relationship. They declined to identify the steps she demanded or to spell out possible consequences. Officials noted the length of the call — such diplomatic conversations usually last about 10 minutes — and said Clinton did most of the talking.

“We think the burden is on the Israelis to do something that could restore confidence in the process and to restore confidence in the relationship with the United States,” said a senior U.S. official, speaking on the condition of anonymity because he was not authorized to comment publicly.

Clinton’s blunt message to Netanyahu came three days after Biden condemned the plans while in Israel. Netanyahu has apologized for the timing of the announcement — he said he did not know it was coming — but has not taken steps to reverse the action. U.S. officials said they found his response inadequate, which in part prompted Clinton’s call.

Crowley’s statement was issued after the Sabbath started in Israel, and there was no immediate comment from the government there.

Relations with Israel have been strained almost since the start of the Obama administration. Now they have plunged to their lowest ebb since the administration of George H.W. Bush.

Then, as now, the two countries quarreled over Israeli settlement expansion in the occupied Palestinian territories. In 1990, then-Secretary of State James A. Baker III publicly gave out the phone number of the White House switchboard and told the Israelis, “When you’re serious about peace, call us.”

The future of Jerusalem is a major point of dispute in the Israeli-Palestinian conflict, with both sides claiming it as their capital. Israel captured East Jerusalem during the 1967 war and subsequently annexed and populated it in a move not recognized by the international community.

Netanyahu’s fragile coalition government includes members who oppose giving up any part of the city. The housing units announced this week would be added to an ultra-Orthodox Jewish neighborhood called Ramat Shlomo, making it politically difficult for the prime minister to roll back the action.

The “quartet” of Middle East peace mediators — the United States, the European Union, the United Nations and Russia — on Friday condemned the construction announcement and said it would “take full stock of the situation” at a previously scheduled meeting in Moscow next week.

http://www.washingtonpost.com/wp-dyn/content/article/2010/03/12/AR2010031202615.html?wpisrc=nl_headline