The sniping inside Netanyahu's coalition was the latest sign of infighting that has hampered US Secretary of State John Kerry's peace efforts. While committed to conducting peace talks, Netanyahu's coalition is dominated by hard-liners who oppose making significant concessions or reject the establishment of an independent Palestinian state.
Netanyahu's chief negotiator, Tzipi Livni, said in an interview that she was optimistic the sides would get through a crisis that has left the talks on the brink of collapse.
She also accused the hard-line "Jewish Home," a pro-settler party, of trying to thwart her efforts. She took special aim at the party's leader, Naftali Bennett, and Housing Minister Uri Ariel, a strong supporter of Jewish settlements.
"There are people in the government who don't want peace," Livni said. "Bennett and Uri Ariel represent those who want to prevent a peace process."
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Negotiations broke down early this month after Israel failed to carry out a promised release of Palestinian prisoners. The Palestinians responded by reviving a campaign for recognition in international bodies, triggering a series of Israeli sanctions.
Over the weekend, Bennett said he would pull his party out of the coalition if Israel carries out the prisoner release, which was to be the last of four stages promised at the outset of talks. The final release is especially contentious both because the prisoners were convicted in bloody attacks, and because 14 of them are Arab citizens of Israel.
Further escalating tensions, three families of Jewish settlers moved into a contested house in the volatile city of Hebron after a protracted legal battle.
Under heavy protection by Israeli forces, the families moved belongings into the home without incident. A group of Palestinian protesters gathered nearby, holding up signs criticizing settlements as the "real" terrorism.
Settlers first moved into the building in 2007, but were evicted by the army amid legal over how they obtained the property. A court recently found the purchase of the home to be legitimate.