Michael Oren, Israel's ambassador to the U.S., reportedly commented on the severely strained relationship between the two countries during a conference call to his fellow consuls-general, according to CNN.com and Haaretz, an Israeli daily newspaper.
A "crisis of historic proportions," says Oren
Oren's remarks come days after a diplomatic spat was triggered by the Israeli Interior Ministry's announcement of plans for new settlement construction in East Jerusalem during a visit by U.S. Vice President Joe Biden to Israeli Prime Minister Benjamin Netanyahu.
Biden sharply criticized Israel's move to further entrench itself in the disputed area, and the Obama Administration has thus far shown no sign of endorsing the Israeli government's actions. Secretary of State Hilary Clinton has called the debacle an insult to the U.S.
For the U.S., actions now speak louder than words
U.S. officials told CNN that Israel must "do something significant" to show it's serious about resuming negotiations with the Palestinians.
"It's not about words any more," a U.S. official told CNN. "We need to see some concrete steps."
A spokesman for Netanyahu could not confirm whether his government has received any specific lists of demands from Washington, saying the Israeli leader was trying to "calm things down."
The Israeli government has begun an investigation into the timing of the announcement, but has not retracted or canceled the projects.
Construction is nothing new, Netanyahu tells the Knesset
The Israeli Prime Minister spoke at the Israeli parliament in defense of the settlement construction plan, saying it is no more aggressive or destructive than other building schemes over the past few decades.
"The development of these Jewish neighborhoods never hurt in any way the Arabs in East Jerusalem and did not come on account of them," Netanyahu said.
Netanyahu's future Jerusalem an "open city" but part of Israel, Arabs say no, U.S. frustrated
The Israeli Prime Minister spelled out his vision of Jerusalem's future as "an open city for all the religions," where "Jews and Arabs, Christians and Muslims live in coexistence, enjoy freedom to worship at their holy sites."
Netanyahu has maintained that Israel had a right to the whole city of Jerusalem, and that any final, lasting peace agreement must include the Holy City within Israel's sovereign borders.
The loss of East Jerusalem is not, however, a condition Palestinian and other Arab leaders can reconcile themselves to, nor accept if they are to survive politically. Palestinian officials see settlement contruction in the disputed areas as a sign that Israel is neither ready nor willing to negotiate in good faith and commit to peace talks.
Proximity talks between the feuding parties have already been difficult for the U.S. to set up, but government officials say the Israeli government has added more stumbling blocks and complications to the latest effort to restart the stalled Mideast peace process.
Biden called the recent Israeli moves a "a step that undermines the trust we need right now."