JERUSALEM (JTA) -- For Israel, the Jewish year 5770 was characterized by ups and downs in relations with the United States, a virtual stalemate in Middle East peacemaking and growing international alienation.Last November, after months of intense US pressure, Prime Minister Benjamin Netanyahu declared a temporary freeze on new construction building in West Bank settlements -- a move designed to create conditions for a renewal of peace talks with the Palestinians. But the freeze was only for 10 months, did not include some 3,000 units already started and did not apply to construction in eastern Jerusalem.The Palestinians, convinced that President Obama would exert even heavier pressure on Israel on the core issues of dispute -- borders, Jerusalem, Palestinian refugees and the nature of a future Palestinian state -- without their having to negotiate, highlighted the lacunae and rejected calls to return to the peace table.As a compromise, special US peace envoy George Mitchell proposed indirect negotiations under US auspices. By early March, both sides had agreed to "proximity talks," with Mitchell shuttling between Jerusalem and Ramallah. US Vice President Joe Biden traveled to the region to announce the breakthrough, but during his visit an Israeli Interior Ministry planning committee approved plans for 1,600 new housing units in Ramat Shlomo, a Jewish neighborhood in Jerusalem on the east side of the pre-1967 border -- what most of the world still considers the West Bank.The move prompted the Palestinians to retract their agreement to participate in proximity talks and infuriated the Obama administration. US officials blamed Israel for what they saw as a deliberate slight calculated to torpedo their peace efforts.In an angry 43-minute telephone conversation, US Secretary of State Hillary Clinton reprimanded Netanyahu, insisting that Israel freeze the Ramat Shlomo project and agree to discuss all the core issues in the proximity talks. Netanyahu explained that the planning committee's announcement had taken his government by surprise as much as it had the Americans, made it clear that there would be no building in Ramat Shlomo for at least two years, and agreed to put the core issues on the table.Parallel to the US-led peacemaking endeavor, the Palestinians stepped up unilateral efforts to create a framework for statehood, focusing on law and order, economic viability and institution building. Palestinian Authority Prime Minister Salam Fayyad made no secret of his intention to have "a well-functioning state in just about every facet of activity" by mid-2011, irrespective of whether any peace agreement with Israel had been reached. After weeks of bickering, the proximity talks finally were launched in early May, after the Palestinians received the go-ahead from the Arab League. Neither side expected to achieve much. It seemed both had agreed primarily to engage to avoid American censure.With ties strained between Washington and Jerusalem, Obama invited Netanyahu to the White House for a meeting that was to patch up the strains in the relationship and provide a positive image in contrast with an earlier, low-profile meeting in March that included no public component or photo op.The meeting was delayed several weeks due to Israel’s commando raid aboard a Gaza-bound aid flotilla from Turkey on May 31. But when the two leaders finally met on July 6, the two projected a public display of warmth. The meeting resulted in no new pressure on Israel. Rather, the Americans exhorted the Palestinians to move from proximity talks, which were not making headway, to direct negotiations between the parties -- the position favored by Israel.The meeting also cleared up earlier tensions over Israel's presumed nuclear weapons' program. In late May, the United States had backed the final communique of a month-long Nuclear Non-Proliferation Treaty Review Conference calling for a nuclear-free Middle East and calling specifically on Israel to sign the NPT.In their meeting, Obama assured Netanyahu that despite his long-term vision of a world free of nuclear weapons, the United States would continue to back Israel's policy of nuclear ambiguity under which Israel does not confirm or deny possession of nuclear weapons or sign the NPT.Although Israel and the United States were in agreement that Iran must not be allowed to develop nuclear weapons, Israel was skeptical about the international community's will to take significant action to prevent it. In mid-February, the chairman of the US joint chiefs of staff, Adm. Mike Mullen, came to Israel to underline Washington's opposition to a pre-emptive Israeli strike on Iran."I worry a great deal about the unintended consequences" of an attack against Iran, Mullen said. The prospect of an Israeli strike, however, significantly diminished following the adoption in early June of new, tougher sanctions against Iran by the UN Security Council.Perhaps the year's most prominent development was a major erosion of Israel's international standing. The downward trend began with the Goldstone report on the Gaza war, released in September 2009, which accused Israel of possible "war crimes" and "crimes against humanity" in its war with Hamas in Gaza in December 2008 and January 2009. Although the report was widely dismissed as biased and deeply flawed, the damage to Israel's image was devastating, and critics of Israel used the Goldstone report to hammer away at its reputation.The Israeli military refuted some of the report’s central accusations, but the perception that Israel used disproportionate force to quell the rocket fire from Gaza remained embedded in international public opinion.An early manifestation of new boldness among Israel's European critics came last December, when Swedish Foreign Minister Carl Bildt led an initiative to have the EU recognize East Jerusalem as the capital of a Palestinian state -- a move eventually quashed by Israel's European allies, with France, Germany and the Czech Republic playing dominant roles.Israel suffered another major PR setback when agents believed to be from the Mossad intelligence agency were accused of using forged foreign passports in the January assassination in Dubai of Mahmoud Mabhouh, a senior Hamas official involved in arms smuggling. Several countries expelled Israeli diplomats. Israel has neither confirmed nor denied its involvement in the assassination.The year's worst PR disaster for Israel came in the May 31 flotilla incident: Nine Turkish citizens were killed when Israel intercepted a ship carrying aid material bound for Hamas-controlled Gaza, which was under Israeli blockade. Though Israel released videos showing its soldiers were attacked when they boarded the ship, a worldwide storm of protest erupted. The anger against Israel resulted in the first-ever Israeli commission of inquiry with an international presence and the easing of Israel’s blockade of Gaza.The main diplomatic casualty of the flotilla affair was Israel's already strained strategic relationship with Turkey. In 2008, the two countries had been close enough for Ankara to mediate between Israel and Syria. But since the war with Hamas in Gaza, Turkey, a key regional power broker with an Islamist government, had been vehemently critical of Israel while ostensibly moving away from the West and edging closer to Iran.Relations between Israel and Syria, Iran's closest ally, oscillated between hopes for a resumption of peace talks and fears of war. French President Nicolas Sarkozy tried his hand at mediation, hosting both Netanyahu and Syrian President Bashar Assad at a multinational conference last November. But the two never met, and by early April Sarkozy had given up, complaining to Israeli President Shimon Peres about Netanyahu's lack of cooperation.The Syrians had insisted that Netanyahu first commit to Israeli withdrawal from the Golan Heights as a basis for negotiations, a demand the Israeli prime minister rejected. Tensions flared in early February, with Assad accusing Israel of leading the region into war, and then again in May, with Netanyahu charging that Iran was trying to drag Israel into war with Syria.Despite Assad's talk about "strategic" readiness for peace with Israel, the Syrians continued to transfer sophisticated weapons to the Shiite Hezbollah militia in Lebanon. Of particular concern to Israeli military planners was the supply of GPS-guided M-600 missiles, which for the first time gave Hezbollah the capacity to pinpoint specific targets in Israel as far away as Tel Aviv.Iran also tried to supply Hezbollah by sea. On Nov. 3, 2009, Israeli naval commandos intercepted a cargo of more than 3,000 Iranian-made rockets destined for Hezbollah on the Francop, an Antigua and Barbuda-flagged vessel sailing from the Iranian port of Bandar Abbas.In the face of the growing threat from the Iranian axis -- Iran, Syria, Hezbollah and Hamas -- Israel significantly augmented its missile and rocket defenses. In January, the Iron Dome system designed to intercept short-range projectiles passed final tests, and in June Israel launched the Ofek 9 spy satellite, enhancing intelligence gathering over Iran.Moreover, despite the political differences, Israeli-American defense ties remained strong and intimate. For example, in late October 2009, the two armies jointly tested the interoperability of their highly sophisticated defense systems against incoming ballistic missiles.Despite its diplomatic difficulties and strategic challenges, Israel's economy prospered, with the most dramatic development the discovery in June of a huge natural gas reserve off the Israeli coast. The field, called Leviathan, is estimated to contain about 15 trillion cubic feet of gas, nearly twice as much as the adjacent Tamar field discovered the year before.According to Infrastructure Minister Uzi Landau, Israel now has enough gas to supply all its needs "for the next 50 to 70 years." Experts have described the finds, which could contain as much as one-fifth of America's known gas reserves or twice that of Britain's, as a potential geopolitical game-changer.As a mark of its increasing economic power, Israel was admitted in May to the OECD, which incorporates the world's most developed nations. Netanyahu described Israel's admittance as a "seal of approval" that would attract investors.And despite the continued aftershocks of the international economic crisis, Israel's economic performance remained robust, with growth of 3.4 percent in the first quarter of 2010 following the 4.4 percent growth of the last quarter of 2009.