WASHINGTON – Prime Minister Binyamin Netanyahu on Saturday said that news of a disagreement with US President Barack Obama over the resumption of peace talks was "blown way out of proportion."

"It's true that we have some differences of opinion, but these are among friends," the prime minister was quoted as saying by a spokesman.

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Netanyahu believed that Obama had "shown his commitment to Israel's security, both in word and in deed," the spokesman added. "And we are working with the administration to achieve common goals."

Obama and Netanyahu acknowledged the differences that divide them even as they emphasized areas of agreement on the peace process, Iran and democratic changes in the Middle East, following their White House meeting Friday.

Netanyahu flatly rejected any return to the 1967 lines, the basis – along with agreed land swaps – for a deal with the Palestinians as laid out in a speech by Obama Thursday.

Obama’s formulation referencing 1967 has been criticized by Israeli officials and advocates, and created greater tension as the two leaders, long perceived to be at odds, headed into their meeting. The private parley lasted over two hours, longer than they were scheduled to spend one-on-one, as the men discussed a range of sensitive issues at a time of rapid change in the Middle East.

“While Israel is prepared to make generous compromises for peace, it cannot go back to the 1967 lines,” Netanyahu said, sitting alongside Obama in the Oval Office.

“These lines are indefensible because they don’t take into account certain changes that have taken place on the ground, demographic changes.”

Following the meeting, a senior Israeli source said of Obama’s formula: “It’s not going to happen.”

A senior White House adviser, however, stressed in background conversations Friday that the US had not intended to imply that Israel would have to go back to the 1967 lines, but rather that they would be adjusted to take into account security needs and new facts on the ground as part of negotiations.

In his statement at the Oval Office, Netanyahu also ruled out any return of Palestinian refugees to Israel proper or that Israel would negotiate with Hamas, branded a terrorist organization by both the US and Israel.

Obama echoed Netanyahu’s last point, using stronger language to dismiss the prospectof Israel talking to Hamas than even a day earlier in his own Middle East address.

“It is not a partner for a significant, realistic peace process,” Obama stated Friday. “The Palestinians are going to have to explain how they can credibly engage in serious peace negotiations.”

But Obama did not accede publicly to Netanyahu’s demand, made in a statement following Thursday’s speech, that he endorse a letter written by former US president George W. Bush that included an American rejection of Palestinian refugees settling in the Jewish state and acknowledged more clearly that Israel’s final borders would include settlements, the demographic changes on the ground alluded to by the prime minister.

However, in a rare reference to the letter by an Obama administration official, White House spokesman Jay Carney said after the meeting that the policy on the 1967 lines outlined by Obama was in keeping with that missive.

“There is nothing that the president said yesterday that contradicts the 2004 letters that were exchanged between President Bush and Prime Minister Sharon, or what Prime Minister Netanyahu said today in the Oval Office,” Carney said at his daily press briefing. He also rejected the notion that Obama had “moved in any direction” away from the principles of the letter, though he avoided endorsing the letter when asked explicitly to affirm some of its sentences.

Netanyahu seemed to push Obama to speak out on the refugee issue after the president in his speech the day before underscored the need to “tell the truth” on sensitive Middle East issues.

“It’s not going to happen.

Everybody knows it’s not going to happen,” Netanyahu said of Palestinian refugees being absorbed by Israel.

“And I think it’s time to tell the Palestinians forthrightly that it’s not going to happen.”

He also pointedly said that “a peace based on illusions will crash eventually on the rocks of Middle Eastern reality.”

A senior Israeli source later described the meeting as “open, candid and friendly,” not least because of Netanyahu’s unvarnished elaboration on his views of the peace process.

Both leaders acknowledged that they didn’t see eye-to-eye on every issue, referring to “differences” on details as they sought to emphasize their larger shared interest in pursuing peace.

“We may have differences here and there, but I think there’s an overall direction that we wish to work together to pursue a real, genuine peace between Israel and its Palestinian neighbors, and peace that is defensible,” Netanyahu said.

Obama, referring to their “prolonged and extremely useful” conversation, said, “Obviously there are some differences between us in the precise formulations and language, and that’s going to happen between friends.”

In a nod to Netanyahu’s focus on Israel’s strategic concerns, the president added, “What we are in complete accord about is that a true peace can only occur if the ultimate resolution allows Israel to defend itself against threats.”

The senior Israeli source said that Netanyahu came out of the meeting with Obama more encouraged than when he went in, though he wouldn’t elaborate as to why that was the case.

He said the prime minister made clear that it was dangerous to have “unrealistic expectations,” and that raising Palestinian hopes of a full Israeli withdrawal to the 1967 lines, or the possibility that Israel would allow descendents of Palestinian refugees to return to Israel, did just that.

Netanyahu, according to the source, felt the need to put Israel’s position on these matters – as well as its adamant refusal to negotiate with a PA that includes Hamas – out there publicly and as clearly as possible.

This was particularly important in terms of impacting the international debate, he explained.

In his public comments, Obama referred to other dangers facing Israel, and the US’s intention to stand against them, particularly in Iran.

He railed against the “the hypocrisy of Iran suggesting that it somehow supports democratization in the Middle East,” and reiterated that “it is unacceptable for Iran to possess a nuclear weapon.”

He also noted that in Friday’s discussions, he had spelled out further steps the White House is taking to pressure Syria.

At the same time, Obama noted that he sees the Arab revolutions taking place as an opportunity for positive changes in the region, albeit ones that will require vigilance and close coordination with Israel.

“We agreed that there is a moment of opportunity that can be seized as a consequence of the Arab Spring, but also acknowledge that there’s significant perils as well,” he said.

Netanyahu made his own reference to recent developments in the Middle East when he spoke of Hamas’s criticism of the US killing of al-Qaida leader Osama bin Laden.

“Hamas has just attacked you, Mr. President, and the United States for ridding the world of bin Laden,” he said. “So Israel obviously cannot be asked to negotiate with a government that is backed by the Palestinian version of al-Qaida.”

The meeting came ahead of Obama’s own address to the American Israel Public Affairs Committee on Sunday. Previewing a message he is certain to repeat there, he stressed Friday that “the extraordinarily close relationship between the United States and Israel is sound and will continue.”

Netanyahu originally planned to come to Washington to speak at the AIPAC conference, and was later invited to the White House as well to address a joint session of Congress Tuesday.

Netanyahu concluded his remarks Friday by noting the burden he has to protect the Jewish people, who have so often been buffeted by history.

“You’re the leader of a great people, the American people,” he told the US president. “And I’m the leader of a much smaller people.”

Obama interrupted him to add, “a great people.”

Netanyahu agreed with Obama’s assessment – “it’s a great people, too” – but then warned: “We don’t have a lot of margin for error… History will not give the Jewish people another chance.”

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