By Dan Williams
JERUSALEM (Reuters) - Israeli Prime Minister Benjamin Netanyahu's government denounced world powers' nuclear agreement with Iran on Sunday as a "bad deal" to which Israel would not be bound.
Yet Israeli officials stopped short of threatening unilateral military action that could further isolate the Jewish state and imperil its bedrock alliance with Washington, saying more time was needed to assess the agreement.
"This is a bad deal. It grants Iran exactly what it wanted - both a significant easing in sanctions and preservation of the most significant parts of its nuclear program," an official in Netanyahu's office said.
Aimed at ending a dangerous standoff, the agreement between Iran and the United States, France, Germany, Britain, China and Russia was nailed down after more than four days of negotiations in the Swiss city of Geneva.
A senior U.S. official said the agreement halted progress on Iran's nuclear program, including construction of the Arak research reactor, which is of special concern for the West as it can yield potential bomb material.
It would neutralize Iran's stockpile of uranium refined to a fissile concentration of 20 percent, which is a close step away from the level needed for weapons, and calls for intrusive U.N. nuclear inspections, the official said.
The Islamic republic - which denies its nuclear program has hostile designs - has also committed to stop uranium enrichment above a fissile purity of 5 percent, a U.S. fact sheet said.
But that still appeared to fall far short of Netanyahu's demand for a total rollback of the Iranian nuclear program.
"You stand and shout out until you're blue in the face, and you try to understand why they're not listening. The world wanted an agreement," Finance Minister Yair Lapid, a member of Netanyahu's security cabinet, told Israel's Army Radio.
"We also said that a diplomatic accord would be good. A diplomatic accord is certainly better than war, a diplomatic accord is better than a situation of permanent confrontation - just not this agreement."
Lapid said that in the Israel had to pore over the deal: "For example, we still don't understand exactly what stepping up the monitoring (on Iran's facilities) means. This is a detailed matter. God really is in the small details."
Economic Minister Naftali Bennett, another security cabinet member, told Army Radio in a separate interview: "Israel does not see itself as bound by this bad, this very bad agreement that has been signed."
Neither minister would be drawn on how Israel might respond. Israel, which is widely assumed to have the Middle East's sole atomic arsenal, sees a mortal menace in a nuclear-armed Iran and has at times threatened to launch a preemptive war against its arch-foe.
Israeli Foreign Minister Avigdor Lieberman said the Geneva deal required the Netanyahu government to conduct a strategic review.
Asked on Israel Radio whether he felt cheated by the United States for its role in the deal, Lieberman said: "Heaven forbid."
(Writing by Dan Williams; Editing by Peter Cooney and Eric Walsh)