After Iran feud, Obama and Netanyahu turn to Israel's aid wish list

U.S. President Barack Obama (R) meets with Israel's Prime Minister Benjamin Netanyahu at the White House in Washington October 1, 2014. REUTERS/Kevin Lamarque (Reuters)

By Jeffrey Heller and Matt Spetalnick JERUSALEM/WASHINGTON (Reuters) - Rare agreement between two long-bickering leaders may actually be in the cards when Israel's Benjamin Netanyahu and U.S. President Barack Obama meet on Monday for the first time since the signing of the Iran nuclear deal. Their White House talks will be an important step towards a new U.S. military aid package that could burnish the right-wing prime minister's security credentials, now challenged by a wave of Palestinian stabbing and shooting attacks. The meeting, the first between the two leaders in 13 months, could also underpin Obama's assurances that he has Israel's back and help deflect accusations from Republican presidential hopefuls that he and any Democrat successor are less pro-Israel. But Israeli-Palestinian peace, a goal that has eluded Obama during his two terms, will likely take a back seat to a reaffirmation of strategic ties – though aides say he will still press the Israeli leader for steps to help keep alive the possibility of a two-state solution for any future negotiations. “The president has made clear that we’re not going to get a two-state settlement during the time of his administration,” a senior U.S. official said in the run-up to the meeting. “He has already said publicly that he doesn’t think so.” For Netanyahu, who infuriated the Obama administration by speaking against an emerging agreement with Iran in Congress in March at the invitation of the Republicans, it is now time, in his words, to move past the “disagreement in the family”. “Now we have to strengthen Israel. And I think that’s the best guarantor of peace,” he said last month. Asked how Iran will factor into the Obama-Netanyahu talks, the senior U.S. official said: “The debate on Iran has subsided. Obviously we feel Congress has now closed that chapter.” Seeking a boost in U.S. defense aid, Israel argues that sanctions relief agreed by world powers under the July deal that curbs Iran's nuclear program will allow Tehran to invest more heavily in its missile development, while redoubling funding for Hezbollah and Hamas guerrilla allies on its borders. Israel now receives $3.1 billion from the United States annually and wants $5 billion per year for 10 years, for a total of $50 billion, Congressional officials have told Reuters. Israeli government spokesmen declined to provide details on the defense aid talks, but one U.S. official predicted the sides would settle for an annual sum of $4 billion to $5 billion. U.S. officials said no agreement on a new aid agreement would be signed during Netanyahu's visit but that he and Obama would “sort of give their blessing” to the Memorandum of Understanding (MOU) negotiations. Under the MOU, Israel may seek to expand its order of 50 F-35 fighter jets, deliveries of which are due to begin next year. It will be the first country in the Middle East to have the aircraft. Israel could also revisit its plans to buy V-22 Osprey tilt-rotor planes built by Boeing Co and Textron Inc's Bell Helicopter unit. IRRITANTS U.S. officials acknowledge that some irritants in relations with Israel are likely to remain, especially if the current right-wing makeup of Netanyahu’s cabinet is unchanged and some ministers continue casting doubt on the two-state solution. Obama was especially irked by Netanyahu’s vow during the heat of a tough re-election campaign earlier this year that there would be no Palestinian state on his watch. Even when Netanyahu backtracked and insisted he was not reneging on long-time Israeli policy, the White House was unconvinced. So Obama, whose Middle East agenda has been mostly hijacked by the Syrian conflict, will still be looking for the Israeli premier to reaffirm his commitment to a two-state solution with the Palestinians during his U.S. visit. Still, no one expects Obama and Netanyahu, after years of acrimony, will even make much of an effort to overcome their poor personal chemistry. Some of Obama’s aides, in fact, believe that beyond working to firm up military packages, Netanyahu is content to wait out the final 14 months of Obama’s presidency, hoping for a better reception for his hardline approach from the next president. “As the administration heads into its final year, a full reset for the bilateral relationship is unlikely,” wrote David Makovsky, an analyst at the Washington Institute for Near East Policy think tank. But, he added, “Neither Obama nor Netanyahu seems to want another stormy encounter.” For now, U.S. officials want Netanyahu to avoid inflammatory rhetoric such as his recent comments linking a late Muslim leader to Nazi Germany's Holocaust. During his three-day visit, he will address a U.S. Jewish group and speak at conservative and liberal think-tanks. As Netanyahu prepared to embark on the trip, a controversy over his appointment of a new communications director raised hackles in Washington and at home. Comments on social media by the nominee, Ran Baratz, a 42-year-old academic, accused Obama of anti-Semitism and suggested that Secretary of State John Kerry had the mental abilities of a 12-year-old. The State Department said Kerry had spoken to the Israeli leader on Thursday and understood that Netanyahu "will be reviewing" the appointment after the White House talks. Netanyahu, who said he had been unaware of Baratz's Facebook entries and website articles - posted before the appointment was announced - challenged the State Department's interpretation of his conversation with Kerry. “I didn't say I'll review Ran Baratz's nomination, but that I'll attend to this when I return,” he wrote. (Additional reporting by Patricia Zengerle and David Alexander in Washington and Dan Williams in Jerusalem; Editing by Giles Elgood)