ROBERT SIEGEL, HOST:
After the U.N. General Assembly upgraded the status of the Palestinian Authority to an observer state the week before last, Israeli Prime Minister Benjamin Netanyahu responded with an expansion of housing plans on the West Bank, near Jerusalem and Tel Aviv. The U.S. called that counterproductive. And it came after Washington had backed Israel in the U.N., helped Egypt mediate a cease-fire in Gaza and funded production of Israel's Iron Dome anti-missile system.
Well, today, Netanyahu said the new housing units will not conflict with a two-state solution. He said the land in question will remain part of Israel in any peace deal with the Palestinians. And Netanyahu reiterated his demand for direct talks with the Palestinian Authority leadership on the West Bank.
PRIME MINISTER BENJAMIN NETANYAHU: We remain committed. And this is what we prefer, a bilateral negotiations without preconditions in which all these questions can be raised. That is our preference. And I hope the Palestinian Authority will go that route because I think it's better for them and it's better for us.
SIEGEL: We're going to check in now on U.S.-Israeli relations and other matters with Martin Indyk, who used to be U.S. ambassador there, as well as assistant secretary of state for the region and who now directs foreign policy programs at the Brookings Institution. Welcome to the program, Ambassador Martin.
MARTIN INDYK: Thank you. Nice to be with you.
SIEGEL: In addition to the recent pro-Israeli actions that I mentioned, the U.S. is committed to preventing Iran from developing a nuclear weapon. It's aligned with Israel on that issue. Were those new housing units or the plans for them, were they seen in Washington as an act of ingratitude?
INDYK: The administration is not say saying that but I'm sure it feels it. And it has been expressed most recently by Rahm Emanuel when he was at an event that we hosted, the Sarbonne Forum; it got a lot of publicity because he made it clear that he thought it was ingratitude. But then, he's the mayor of Chicago, not the chief of staff of the White House.
But I do think that there is a feeling that it's not just that this Israeli government takes actions that create a problem for the United States, but that this Israeli government is always coming to Washington for help, particularly in the case of the U.N. vote. And yet, they don't give the administration anything to work with and they do these kinds of things which make it even more difficult for the United States to defend Israel.
SIEGEL: Israel is in the thick of an election campaign. Does the government benefit by doing that or does it cost them anything to appear to have frosty relations with U.S. from time to time?
INDYK: Well, I think that the fact that elections are coming up in mid-January is what is determining Netanyahu's behavior at the moment. Henry Kissinger famously said that Israel doesn't have a foreign policy, it only has domestic politics. Well, that's especially the case at this moment and Bibi is playing to his right-wing. He's got a challenge from his right-wing. There is a right-wing religious party that is taking votes away from him. And the best way he can boost his support is by doing what the right-wing cares about, which is more settlement activity.
SIEGEL: Let's talk about Israel and Israel's neighbor, starting with the Palestinians. The Palestinian Authority of President Mahmoud Abbas, the U.N. vote notwithstanding - which has renounced violence, by the way - is losing ground to Hamas it appears, which controls Gaza. Meanwhile, Israeli politics, as you say, seem to be moving rightward. Is Washington, under those circumstances, likely to press for negotiations and move things toward a big peace deal in the coming years?
INDYK: I think that it will depend very much on the outcome of the Israeli elections and what happens in the dynamic between Fatah and Hamas, these two wings of the Palestinian movement. But at the moment, I think that President Obama - looking out at his second term priorities - is not likely to make it a priority in the way that he did the first term, because it doesn't look like he's got anybody to work with on either side. I suspect we'll leave them to their own devices until they come to him and say we really do want to make a deal.
SIEGEL: Beyond the West Bank and Gaza, which is to say beyond the Palestinian areas, Israel's neighbors include: Syria, which is falling apart and that conflict is spilling over into Lebanon; Egypt appears to have lost control of the Sinai, which neighbors Israel, and President Morsi faces a political crisis that we're covering day by day. Is there a risk right now of some great regional conflict, possibly some great regional war worse than anything we've seen in recent years?
INDYK: I think there's certainly a great deal of tumult and it's exacerbated not only by all of the things that you just mentioned but, of course, the looming confrontation over Iran's nuclear weapons program, where the United States and the P5 Plus-1 Pals, I think, will put down an offer, fairly generous offer to test Iran's intentions.
But if Iranians don't take it up and continue to enrich the uranium and stockpile it, it could get to the point where mid-year or maybe in the fall we're headed for a confrontation there. So, yes, you could have all of these things coming together in a kind of perfect, horrible storm.
SIEGEL: Ambassador Indyk, thanks for talking with us once again.
INDYK: Thank you, Robert.
SIEGEL: Martin Indyk directs the foreign policy program at the Brookings Institution in Washington, D.C. Transcript provided by NPR, Copyright NPR.