Israeli Prime Minister Benjamin Netanyahu has put his country on a possible collision course with its closest ally, the United States, when he made clear his opposition to an American demand that Israel completely halt expansion of West Bank settlements.

"We will not agree to freeze life in the settlements," the traditionally hardline Israeli leader told members of the powerful Foreign Affairs and Defense Committee of the parliament on Monday.

His remarks came just hours before US President Barack Obama blasted Israel's settlement activity in the West Bank, including expanding existing settlements to allow for "natural growth."

"Part of being a good friend is being honest," Obama told the National Public Radio.

"I think there have been times when we are not as honest as we should be about the fact that the current direction and the current trajectory in the region is profoundly negative, not only for Israeli interests but also for US interests."

Obama voiced his position ahead of a scheduled trip to the Middle East, where he would make a key speech on his Middle Eastern policy in the Egyptian capital of Cairo, but would not stop over at Israel.

"President Obama believes in the positions he is putting forward. At the same time he needs to be familiarized with the situation on the ground in the West Bank," said Dore Gold, president of the Jerusalem Center for Public Affairs, a think tank based in Jerusalem.

"Israeli families are not going to stop having children and thereby prevent natural growth," said Gold, a former Israeli ambassador to Washington.

In recent weeks, Obama has held meetings with key regional leaders, including Netanyahu, Jordanian King Abdullah II and Palestinian leader Mahmoud Abbas.

It is widely believed that the US president and the moderate Arab leaders agree that the best way forward is via the Arab Peace Initiative, which calls for full Israeli-Arab peace in exchange for a complete Israeli withdrawal from all the territories it took in the 1967 war.

The return for Israel might also be substantially larger, as the 57-nation Organization of Islamic Conference could possibly pave the way for a full normalization of ties between the Jewish state and all Muslim countries.

However, the key sticking point at the moment is the settlements. The Jewish state has been building throughout the past four decades, although the international community, including the United States, has been condemning Israel's "settlement policy" and demanding an end.

"If eventually Israel and the Palestinians abide by some agreement, then that is clearly a separate issue, but at the moment Israel is not permitted to expand any settlement by international law," said Sarit Michaeli, spokeswoman for B'Tselem, an Israeli rights group monitoring the occupied territories.

"Bringing it all down into this discussion about natural growth and allowing kindergartens to be built in settlements is getting bogged down in minor details and forgetting the larger picture," said Michaeli.

Gold said that the Obama administration needs to clarify its view on the promises made by the previous US administration under George W. Bush that Israel would keep major settlement blocs under any peace agreement with the Palestinians.

Should Obama reaffirm the stance of his predecessor, who was widely believed to be biased in favor of Israel, "why should the natural growth in settlement blocs be even up for discussion?" said Gold.

However, some other analysts stressed that the argument is invalid, as international law makes clear that all Israeli settlement activities are illegal until a final-status agreement is signed between Israel and the Palestinians, which does not appear to be in the offing.

(Xinhua News Agency June 3, 2009)