WASHINGTON Secretary of State Hillary Clinton said on Monday that Israel faces "difficult but necessary choices" on Mideast peace and pledged to push for biting sanctions on Iran over its nuclear program.
Clinton, speaking to the influential pro-Israel AIPAC lobby group after a turbulent stretch in U.S.-Israel relations, said the Obama administration had a "rock solid" commitment to Israel's peace and security.
But she singled out Israel's policy of expanding Jewish settlements in East Jerusalem and the West Bank as an obstacle to progress which could imperil U.S. efforts to bring Israel and the Palestinians back to the negotiating table.
"New construction in East Jerusalem or the West Bank undermines mutual trust and endangers the proximity talks that are the first step toward the full negotiations that both sides want and need," Clinton said.
"It exposes daylight between Israel and the United States that others in the region could hope to exploit. And it undermines America's unique ability to play a role -- an essential role, I might add -- in the peace process."
The issue of Jewish settlements has soured U.S. ties with its closest Mideast ally as Israel approved new construction in East Jerusalem during a visit by Vice President Joe Biden, spurring Palestinians to say they would pull out of the indirect talks that Washington only just managed to launch.
Clinton is due to meet visiting Israeli Prime Minister Benjamin Netanyahu later on Monday and U.S. Mideast peace envoy George Mitchell is in the region seeking to get the talks back on track.
Netanyahu, who arrived in Washington earlier on Monday, has proposed a set of confidence-building measures following the settlement fracas, but said on Sunday Israel would not give up its right to build Jewish settlements around Jerusalem.
Clinton stressed Washington's view that the status quo between Israel and the Palestinians was unsustainable, saying "the dynamics of demography, ideology, and technology" will eventually force political change.
It was also complicating a range of other U.S. policy goals in the region, including its efforts to muster a united front against Iran's nuclear program, she said.
"There is another path. A path that leads toward security and prosperity for all the people in the region. It will require all parties -- including Israel -- to make difficult but necessary choices," Clinton said.
PRESSURE ON SETTLEMENTS
She indicated that Washington would continue to press Israel to go slow on new settlement construction, repeating the U.S. view that continued Israeli settlements are illegitimate.
"As Israel's friend, it is our responsibility to give credit when it is due and to tell the truth when it is needed," Clinton said.
Clinton said the United States would continue to demand that Hamas, the Islamist Palestinian group that controls the Gaza Strip, renounce violence and recognize Israel. She also repeated U.S. calls for the release of captured Israeli soldier Gilad Shalit, according to the speech excerpts.
And she said the United States would continue to press for direct negotiations that could lead to a two-state solution for Israel and the Palestinians, with U.S. Mideast peace envoy George Mitchell's efforts to start indirect "proximity" negotiations as an essential foundation.
"These proximity talks are a hopeful first step, and they should be serious and substantive. Ultimately, of course, it will take direct negotiations to work through all the issues and end the conflict," she said.
Clinton said Iran remained a major threat, both to Israel and the broader region, and said she saw a growing consensus that it was time to take tough new steps to pressure Tehran to give up its nuclear program.
Clinton said a nuclear-armed Iran "would embolden its terrorist clientele and could spark an arms race that could destabilize the region."
Clinton said the United States and its partners in the U.N. Security Council were determined to show Iran's leaders that there are consequences to intransigence over its nuclear program, which Tehran insists is purely for peaceful purposes.
"Our aim is not incremental sanctions, but sanctions that will bite," Clinton said, adding that it was taking time to reach agreement but that this was "a worthwhile investment for winning the broadest possible support for our efforts."
(Reporting by Andrew Quinn; Editing by Patricia Wilson and David Storey)