Middle East Inside Line: US Reaction to House Demolitions, Netanyahu-Mubarak Meeting Deferred and More...

US Criticises Demolition of Palestinian Houses: On Wednesday, State Department spokesman Philip Crowley criticized Israel's recent demolition of Palestinian houses in East Jerusalem: "It is the very kind of action that poses a potential obstacle to direct negotiations. Any steps that the Israelis, Palestinians or other parties take that change the facts on the ground, we think are unhelpful."

Netanyahu Not Going to Cairo: Egypt deferred "the planned meeting between President Hosni Mubarak and Prime Minister Benjamin Netanyahu. Israeli sources claim that the underlying reason of the postponement is Mubarak's deteriorating health situation (see separate EA entry with further information). However, speaking with Al-Shorouq on Wednesday, a senior Egyptian official denied reports of Mubarak's ailing health, saying the meeting was pushed back due to "provocative moves made by Israel".

Turkey Insists on International Probe of Flotilla Attack: After Maj.-Gen. Giora Eiland announced that a military commission's findings that the Israeli Navy had made "operational mistakes" in the 31 May operation against the Freedom Flotilla to Gaza, Turkey's Foreign Minister Ahmet Davutoglu told reporters Tuesday that he welcomed the acknowledgement of "mistakes". However, he said the Israeli commandos had committed "a crime" and said Turkey wants an international enquiry.

Israel Radar System Successfully Tested: Israel tested the Iron Dome's advanced radar system successfully on Wednesday, moving a step closer to deploying both radars and interceptor missiles along the Gaza and Lebanon borders.

Hezbollah's "List of Targets": In an interview with AFP, Naim Kassem, the leader of Hezbollah, said that the group has "large and precise" list of Israeli targets to attack if a third Lebanon war breaks out. He continued:

We now hold a large and precise bank of Israeli targets, and Israel will have to pay the price for any step it takes.

Hezbollah has worked to develop its readiness to rise to the challenge should it arise, and we can safely say that in the past four years we have prepared ourselves far more than Israel has.

Israel-Turkey Analysis: Netanyahu Saves Face with Foreign Minister by Snubbing Ankara and Washington (Yenidunya)

The most prominent fallout over the clandestine talks between Israeli Minister of Industry Benjamin Ben-Eliezer and Turkish Foreign Minister Ahmet Davutoglu in Switzerland? It was probably between Israeli Prime Minister Benjamin Netanyahu and his Foreign Minister, Avigdor Lieberman.

Lieberman was furious not only that he had not been informed of the mission but that Netanyahu would even consider sending a senior cabinet minister to hold covert talks with Turks. His argument was that if Israel agreed to compensate the families of those killed in the Israel Navy's raid on a Gaza-bound flotilla, the country would suffer a serious blow to its standing in the region.

Turkey-Israel Mystery: A Secret Meeting with Ankara (Followed by an Israeli Apology?)

Lieberman's problem not only Israel's "national interests". Pressure has been increasing day-by-day on his shoulders since the majority of the international community, including Washington, is unhappy with the Foreign Minister's position.

And it is not external powers who are displeased. Netanyahu and Defense Minister Ehud Barak see their supposed colleague as a hindrance to manoeuvres with Palestinians and confrontation of the Hamas issue, adding to Israel's isolation from the international community.

Of course, Lieberman knows what is on Netanyahu's mind. "The foreign minister takes a very serious view of the fact that this occurred without informing the Ministry of Foreign Affairs," Lieberman's office said in a statement immediately following the revelation of the Ben Eliezer-Davutoglu talks. "This is an insult to the norms of accepted behavior and a heavy blow to the confidence between the foreign minister and the prime minister."

Haaretz reports, from a source close to Lieberman who has spoken with him in recent days, that the Foreign Minister has been disturbed by Netanyahu's behavior for quite some time. According to the source, Lieberman is angry over what he sees as the Premier's legitimization of the global boycott. Indeed, in an interview with Israel Radio on Thursday morning, Lieberman criticized the premier for coordinating the Turkish-Israeli meeting with both Defense Minister Barak and the White House.

When the meeting came to light, Netanyahu had to step back. He apologised to Lieberman, and they met on Friday. Offices of the two men said that they had agreed to work with complete coordination in the future.

Yet this supposed reconcilation still sat alongside the report from Turkish media that Ben-Eliezer had indicated to Davutoglu that Israel was rethinking its refusal to compensate and apologize to the families of those killed in the 31 May 31 on the Freedom Flotilla.

That report had to be pulled back. Ben-Eliezer's bureau said, "We have no plans to do that, and the minister did not promise anything to that regard during his meeting with the Turkish Foreign Minister two days ago." Netanyahu spoke even more sharply, telling Israeli television that the covert meeting was a Turkish "provocation" and insisting that there would be no apology or compensation for the Flotilla confrontation.

But if Netanyahu had repaired relations with Lieberman, he may have done so at the cost of his relations with the US. Haaretz reports, from Israeli sources, that Washington was the organizer. The US had already warned both allies not to compete in the region and sent the signal that former Congressman Robert Wexler, one of the founders of the Turkish-American Friendship Group in the Congress, could be the new ambassador to Israel.

After the Ben-Eliezer meeting with Davutoglu, Washington emphasised the necessity of discussion between its two allies. State Department spokesman Philip Crowley said:

We certainly support this kind of dialogue that hopefully can help repair the fractures that have existed in recent weeks and months between the two countries.

We have had conversations with both countries individually. In those conversations, we have reinforced that a relationship between Turkey and Israel is not only in the best interest of the region, it is in the interest of -- and supports our interests in the region as well.

So, having effectively withdrawn his secret initative, having snubbed Turkey and possibly the US to save face with Lieberman, what next for Netanyahu?