President Obama said Tuesday that it's difficult to envision how a Palestinian state could be formed following Netanyahu's negative comments during his re-election campaign. (Reuters)

President Obama said Tuesday that the prospect of Israeli-Palestinian peace “seems very dim” in the wake of pre-election remarks last week by Israeli Prime Minister Benjamin Netanyahu and that he is evaluating “how we manage Israeli-Palestinian relations over the next several years.”

“What we can’t do is pretend there’s a possibility of something that’s not there,” Obama said during a news conference with visiting Afghan President Ashraf Ghani. “For the sake of our own credibility, I guess we have to be honest about this.”

His remarks were the sharpest in a series of U.S. expressions of barely concealed anger since Netanyahu, appealing to the far-right Israeli vote, said there would be no Palestinian state while he was prime minister.

Obama acknowledged that Netanyahu had issued several “correctives” since his victory in the March 17 elections, but the president made clear that he “took him at his word” the first time around, as did “a lot of voters inside Israel.”

“Afterwards, he pointed out that he didn’t say ‘never,’ but there would be a series of conditions,” Obama said of explanatory remarks Netanyahu has made since the elections. “But, of course, the conditions were such that they would be impossible to meet anytime soon.”

Obama said the rejection of a fundamental premise of decades-long efforts to resolve the conflict, under Republican and Democratic administrations, may trigger “a reaction by the Palestinians that, in turn, could elicit a counter­reaction by the Israelis.”

“That could end up leading to a downward spiral of relations that would be . . . bad for everybody,” he said.

Other officials have suggested that the results of the administration’s “evaluation” of the way forward might include a change in U.S. support for Israeli resistance to U.N. efforts to impose a two-state solution.

U.S.-Israeli tensions were also exacerbated by a report late Monday in the Wall Street Journal that Israel had spied on negotiations with Iran over its nuclear program. The deadline for a framework agreement in the talks is next Tuesday.

Obama declined to discuss the subject. “As a general rule,” he said, “I don’t comment on intelligence matters in a big room full of reporters, and I think I’ll continue with that tradition.”

But senior administration officials said it was no surprise that the United States and Israel spied on each other, as well as on other allies and adversaries in the Middle East and beyond, including Iran. What appeared to irritate them was the assertion in the story that Israel had used information gleaned from conversations and intercepts concerning the secret talks between Iran and Western leaders to help persuade members of Congress to oppose any agreement that might be reached.

Congress would not need to rely on the Israelis for information, one official said, because the administration has regularly and fully briefed lawmakers on the negotiations, including more than 60 “meetings, hearings, and calls with Senate and House members and their staffs” in the past four weeks.

“Of course, that doesn’t mean the Israelis aren’t selectively picking and choosing what info they share in their many interactions with our Congress,” said the official, who was not authorized to comment publicly on the matter.

Officials took issue with the accuracy of some of the information the report said had been transmitted by the Israelis, including that Iran would be permitted under the prospective deal to deploy powerful IR-4 centrifuges to enrich uranium.

Although the administration has regularly briefed Israel on the progress of the negotiations, which began in 2013, those sessions have been sharply cut back this year, after U.S. officials became convinced that Israel was incorrectly characterizing some aspects of the talks — cherry-picking what it saw as negative details — in its public comments.

Netanyahu has called the still-uncompleted agreement a “bad deal” that would not ensure a sufficient delay in Iran’s ability to develop a nuclear weapon. Obama noted at the news conference that if an agreement is reached, it will be public.

“People are going to be able to lift up the hood and see what’s in there,” Obama said. “So, I have confidence that if there’s an agreement, it’s going to be a good agreement.”

Asked about the report of espionage and leaking to Congress, House Speaker John A. Boehner (R-Ohio) said he was “shocked” and “baffled.”

“I’m not aware of that at all,” Boehner said.

Boehner was instrumental in events leading to the current U.S.-Israeli estrangement. He invited Netanyahu to address a joint meeting of Congress about Israeli concerns over the possible terms of a deal with Iran. The White House, in what it called a violation of protocol, was not informed of the invitation or of Netanyahu’s acceptance.

Obama, citing the proximity of Israeli elections to the March 3 speech, declined to meet with Netanyahu during his visit to Washington.

As details of the negotiations have circulated in recent months, the administration and Israel have lobbied Congress heavily in a contest that Israel has appeared to be winning. Hundreds of lawmakers have signed letters to Obama demanding that he submit any final accord with Iran to Congress for approval.

But none volunteered Tuesday that they had received or been influenced by information about the negotiations transmitted by Israel. A senior aide to Sen. Richard Burr (R-N.C.), the Intelligence Committee chairman, said Burr had no information on the spying allegation.

Sen. Dianne Feinstein (Calif.), the committee’s ranking Democrat, met with Israeli Ambassador Ron Dermer at her home in Washington to discuss Israel’s position on Iran before Netanyahu’s speech, said a senior aide, who declined to say whether Dermer had shared sensitive information.

“The fact of the meeting is true,” the Feinstein aide said. “Before and after, she was very public about her opposition to Netanyahu giving the speech.”

In Israel, a senior official in Netanyahu’s office said Israel did not engage in espionage against the United States. “The false allegations are clearly intended to undermine the strong ties between the United States and Israel and the security and intelligence relationship we share,” said the official, who spoke on the condition of anonymity in order to discuss intelligence matters.

Both the CIA and the Office of the Director of National Intelligence declined to discuss the spying report.

Relations between Obama and Netanyahu have never been warm, although Obama took pains at his news conference to say that the United States and Israel remain close allies and that their military and intelligence cooperation would continue unabated.

As for the president and the Israeli prime minister, Obama described the relationship as “very businesslike.”

He did not deny the strains, but said there was a tendency to frame U.S.-Israeli relations as a personality issue between him and Netanyahu. “The notion is, well, if we’d all just get along, everybody cools down, then somehow the problem goes away.”

Netanyahu, Obama said, “is representing his country’s interests the way he thinks he needs to, and I’m doing the same. . . . We believe two states is the best way forward for Israeli security and for Palestinian aspirations and for regional stability. That’s our view.”

“The prime minister,” he said, “has a different approach, and so this can’t be reduced to a matter of somehow let’s all hold hands and sing ‘Kumbaya.’ ”

William Booth in Jerusalem and Greg Miller in Washington contributed to this report.

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