By Crispian Balmer
JERUSALEM (Reuters) - Israeli Prime Minister Benjamin Netanyahu should take the heat out of his dispute with U.S. President Barack Obama, his top coalition partner said on Tuesday, warning that the spat over Iran was not helping Israel.
Relations between Israel and Washington, traditionally the closest of allies, have soured over the past month with Netanyahu openly criticizing Obama for backing the big powers' interim deal with Iran meant to curb its nuclear activities.
Some analysts believe U.S.-Israeli ties have deteriorated to their worst point in more than 20 years, unsettling the Jewish state which relies heavily on military and diplomatic support from Washington.
"I think we have to lower the flames with the Americans," said Finance Minister Yair Lapid, who heads the second largest party in the government. "This confrontation isn't good and it also doesn't serve our goal," he told Army radio.
U.S. officials have sought to calm Israeli jitters, saying they will push for a comprehensive deal with the Iranians at the next round of negotiations, repeating past pledges that Washington will not let Tehran develop an atomic bomb.
Lapid said he agreed the Iran interim accord was not good, backing the generally held view in Israel that it let Tehran off the hook just as economic sanctions were hitting hard, but said Netanyahu needed to air his frustrations in private.
"This is the best way to do it and so it has always been. You sit behind closed doors and speak about it quietly," he said, echoing comments made by opposition politicians.
Israel fears Iran is trying to develop atomic bombs, something Tehran denies, and has threatened to attack the Islamist state if it concludes that diplomacy and sanctions cannot bring about a dismantling of its atomic program.
Israel is widely presumed to have the Middle East's only nuclear arsenal. Western powers suspect Iran has sought to develop the means to produce nuclear weapons.
Iran says it is enriching uranium solely for future civilian atomic energy and to make isotopes for medicine.
A poll published late Monday by the Tel Aviv University-Israel Democracy Institute Peace Index showed that 77 percent of Israelis do not believe the world powers' deal will lead to the end of what they see as Iran's nuclear weapons program.
Seventy-one percent of Israelis thought the United States was still their closest ally, although 49 percent said Israel needed to find new partners to reduce their dependence on Washington.
U.S. Secretary of State John Kerry was due to arrive in Israel on Wednesday for yet another round of talks centered on Iran and also faltering Israeli-Palestinian peace negotiations.
A diplomatic source said Kerry and Netanyahu had a furious discussion at their last meeting in Israel on November 8, with advisers from both sides asked to leave the room.
There is little sign that the conversation will be much warmer this time around.
An Israeli watchdog, Peace Now, reported more plans for Jewish settlement building in occupied West Bank territory - which Palestinians seek as part of a future state - ahead of Kerry's visit.
A spokesman for the group said on Tuesday Israel had since July advanced plans for 3,000 new settler homes and that in all 8,500 were in "various stages of construction" since March.
At least two local newspapers published articles on Tuesday quoting Israeli officials lambasting Obama's inner circle and defending Netanyahu's outspoken handling of the Iran issue.
The Israel Hayom daily, which is very close to Netanyahu's rightist political camp, quoted an official in his office comparing the current situation with the 1930s, when Jews warned of the risk posed by Nazi Germany.
"Seventy-five years ago, when there was no (Israeli) state, the Jews tried to talk with American President Roosevelt behind closed doors, and that did not really help the Jews of Europe," the unnamed official was quoted as saying.
Netanyahu has compared the dispute with Iran to the build-up to World War Two, with some of his supporters putting the recent Geneva accord on a par with the 1938 Munich Agreement, when Britain and France tried to avoid conflict with Germany.
(Additional reporting by Allyn Fisher-Ilan; Editing by Mark Heinrich)