Prime Minister Benjamin Netanyahu on Sunday referred to Israel's recent approval of a plan to build 1,600 new housing units in East Jerusalem, announced during U.S. Vice President Joe Biden's visit, as a "harmful" incident that "should not have happened."
In his first public remarks on what Israeli commentators called his most serious crisis with Washington since taking office a year ago, he gave no sign he would meet Palestinian demands to cancel a project for 1,600 new settler homes.
"There was a regrettable incident here, that occurred innocently," Netanyahu told his cabinet at its weekly meeting, though he urged ministers to stay calm amid the tensions.
"We opened the newspapers this morning and read all kinds of commentary and assumptions regarding the crisis with the U.S. I recommend not to get carried away and to calm down," Netanyahu said.
Netanyahu reiterated that he had appointed a committee to investigate the events leading up to the decision to ensure that such a thing not happen again.
The prime minister stressed the importance of Israel's relations with the United States, which were strained as a result of the incident.
The U.S. has waged harsh criticism of Israel's announcement on Tuesday about new settlement construction - a move that deeply embarrassed Biden and imperiled U.S. plans to launch indirect negotiations between Israel and the Palestinians.
The investigative team will be headed by Director-General of the Prime Minister's Office, Eyal Gabai, and will include members of the Interior Ministry, Housing Ministry and the Jerusalem Municipality.
U.S. Secretary of State Hillary Clinton on Friday called Israel's announcement "insulting" to the United States.
"I mean, it was just really a very unfortunate and difficult moment for everyone - the United States, our vice president who had gone to reassert our strong support for Israeli security - and I regret deeply that that occurred and made that known," Clinton told CNN.
Clinton did not blame Netanyahu personally for the announcement, but she said: "He is the prime minister. Like the president or secretary of state...ultimately, you are responsible."
Sources in the Prime Minister's Office said over the weekend that the ensuing crisis appeared to be orchestrated by the U.S. administration, as Netanyahu apologized to Biden and believed that the crisis was behind the two allies.