Just after US President Barack Obama's landmark address in Cairo, and just before US Mideast envoy George Mitchell returns to the region on Tuesday, the dispute between Washington and Jerusalem over settlement construction ratcheted up a notch. Israeli officials rejected on Saturday a statement by US Secretary of State Hillary Clinton dismissing Israeli assertions that the Bush administration had agreed to allow some construction in the settlements to allow for natural growth. "There is no memorialization of any informal and oral agreements. If they did occur, which, of course, people say they did, they did not become part of the official position of the United States government," Clinton told reporters on Friday, in a news conference with her Turkish counterpart, Ahmet Davutoglu, at the State Department. Recently, Israeli officials, buttressed by some former Bush administration appointees, have maintained that Jerusalem retained tacit US approval to build in already existing settlements, so long as new settlements were not created, the lines of the settlements' boundaries did not expand and no government aid was given to these residents. Some Israeli officials are contending that the US is backtracking on previous understandings which were vital to Israel supporting both the Gaza disengagement, and the road map, a three-stage process leading towards a Palestinian state which called for a halt to settlement construction, including for natural growth. Clinton said that despite reports of such understandings, which were outlined by former deputy national security adviser Elliott Abrams in The Washington Post in April, "There are contrary documents that suggest that they were not to be viewed as in any way contradicting the obligations that Israel undertook pursuant to the road map. And those obligations are very clear." In response, a senior government official reiterated Jerusalem's position that understandings "were reached between the Israel and American government concerning settlements, and on the basis of those understanding Israel accepted the road map and disengaged from the Gaza Strip. Those understandings have been confirmed publicly by leading officials of the Bush administration." Clinton and other State Department officials have also repeatedly refused to endorse a written document in 2004 from then US president George W. Bush to former prime minister Ariel Sharon, in which he acknowledged that it was not realistic to expect Israel to pull back completely to the June 1967 lines, something Israel interpreted as US support for its holding on to the large settlement blocs close to the Green Line. Israel officials have long maintained that construction in these specific settlement blocs should not be subject to the same restraints imposed on other settlements, which are mostly located outside of the security fence and often near Palestinian population centers. When the subject of whether the US felt bound by the Bush letter was raised with State Department Assistant Secretary Philip Crowley on Wednesday, he referred to Israeli and Palestinian obligations under the road map. Asked whether this meant the US was not bound by the letter, he replied, "I would suggest that you keep focusing on the road map." Despite the differences, a senior administration official told The Jerusalem Post shortly after Obama's speech in Cairo Thursday that "there's a professional, constructive dialogue on this issue," and that "we have differences, but believe we can find an arrangement that works." The settlement issue is expected to be a primary focus of Mitchell's discussions here this week. The settlements issue has become a major flash point between the US and Israeli governments, as Obama and his top deputies have frequently and publicly repeated the demand that settlement construction stop, despite the political complications that creates for Prime Minister Binyamin Netanyahu and his coalition. Obama himself attempted to defuse some of the tension during his European trip this weekend, however, pointing out that his demands have been long-standing US policy. He also stressed that he is not only making demands of Israel. "I've discussed the importance of a cessation of settlement construction," he said in France Saturday, "but I also want to reemphasize, because that's gotten more attention than what I've also said, which is the Palestinians have to renounce violence, end incitement, improve their governance capacity so that Israelis can be confident that the Palestinians can follow through on any commitments they make across the table." The day before, in Germany, he also emphasized his call for the Arab states to take decisive action. "The Arab states have to be a part of this process. It's not sufficient just to point at the Palestinian problem and then say we are not going to engage, we're not going to take responsibility," he said. "They are going to have to step up as well because the Arab states not only are important politically, they're also important economically. And to the extent that they put their shoulder behind the wheel, that can move the process forward in a significant way." He referred to them making economic and diplomatic moves towards Israel as the process gains momentum. Obama also reiterated the importance of a two-state solution and making progress toward that goal, referring to "the need for all of us to redouble our efforts to bring about two states, Israel and a Palestinian state, that are living side by side in peace and security." He added, "I think the moment is now for us to act on what we all know to be the truth, which is that each side is going to have to make some difficult compromises." In a joint press conference with Obama in France on Saturday, French President Nicolas Sarkozy joined the US president in calling on Israel to stop settlement construction. On Iran, the two presidents again mutually called for the Islamic Republic not to develop a nuclear weapons program. Obama said there must be "tough diplomacy" with Teheran on the nuclear issue. Sarkozy said he worried about "insane statements" by President Mahmoud Ahmadinejad. Meanwhile, Obama on Friday delayed for another six months moving the US Embassy in Israel to Jerusalem, in what has become a bureaucratic ritual since Congress passed a law in 1995 requiring the move. An escape clause in the Jerusalem Embassy Act allows the president to delay the move every six months if he determines it contrary to US security interests. "US policy on Jerusalem has not changed; Jerusalem is a final-status issue to be resolved in peace talks between Israelis and Palestinians," a White House official said Friday. AP contributed to this report.