By Doina Chiacu WASHINGTON (Reuters) - The United States expects the next Israeli government to end nearly 50 years of occupation and clear the way for a Palestinian state, White House Chief of Staff Denis McDonough told Jewish Americans on Monday. To cheers from the liberal Jewish group J Street, McDonough vowed to safeguard Israel and criticized Israeli Prime Minister Benjamin Netanyahu's abandonment of a Palestinian state in the run-up to his re-election on March 17. Netanyahu is working to form Israel's next coalition government. One of President Barack Obama's closest advisers, McDonoughsaid a separate state is the best guarantee of Israel's long-term security. "An occupation that has lasted for almost 50 years must end, and the Palestinian people must have the right to live in and govern themselves in their own sovereign state," McDonough said. Palestinians seek a state in Gaza, the West Bank and East Jerusalem, lands Israel captured in the 1967 Arab-Israeli war. "In the end, we know what a peace agreement should look like. The borders of Israel and an independent Palestine should be based on the 1967 lines with mutually agreed swaps," McDonough said. Since his re-election Netanyahu has tried to row back on his election eve remarks dismissing a two-state solution, long a cornerstone of U.S. peacemaking efforts. But McDonough said the United States remained troubled. "We cannot simply pretend that these comments were never made," he said. Separately, State Department spokeswoman Marie Harf told reporters the administration was unsure where the Israeli leader stood. Netanyahu has said "diametrically opposing things, so which is his actual policy?" Harf told reporters. "I think we just don't know what to believe at this point." J Street is a proponent of two states side by side and sharply criticized Netanyahu's reversal on Palestinian statehood along with pre-election remarks accusing leftists from abroad of working to turn out minority Arab Israeli voters to unseat him. Netanyahu apologized to Arab Israelis on Monday for those comments, which his critics denounced as racist and which drew expressions of concern from the White House. McDonough also defended the deal world powers are trying to reach to contain Iran's nuclear ambitions, saying it was "realistic and achievable." Earlier in the day Israeli strategic affairs minister Yuval Steinitz told Reuters in Paris that Israel believed world powers would reach a "bad deal" on Iran. (Additional reporting by Emily Stephenson in Washington; Editing by Howard Goller)
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