Netanyahu and Mitchell meeting after tense White House talks

               U.S. special envoy George Mitchell on Wednesday arrived at the Washington hotel where Prime Minister Benjamin Netanyahu is staying to continue talks to ease tensions between Israel and the United States, Haaretz reported. "We are continuing with our talks and efforts with good will," said Mitchell, who was accompanied by advisers Dennis Ross and Daniel Shapiro. U.S. President Barack Obama held a one-on-one meeting with Netanyahu at the White House on Tuesday as Israel sought to smooth over the diplomatic spat with Washington. "The president asked the prime minister to take steps to build confidence for proximity talks so that progress can be made toward comprehensive peace," White House spokesman Robert Gibbs told reporters, without elaborating. "There are areas of agreement and there are areas of disagreement." Efforts to restore ties may have hit a roadblock, however, with the approval Tuesday of a further 20 East Jerusalem homes beyond the Green Line at the site of the former Shepherd Hotel. The two leaders met for around 90 minutes. The White House had no immediate comment on what they discussed. At the end of the meeting, Obama departed to his living quarters at the White House, while Netanyahu met with his advisers for over an hour in the Roosevelt Room. Netanyahu then requested another meeting with the U.S. president, and the two spoke again, one-on-one, for a half an hour. "President Obama and the prime minister met privately for an hour and a half, the atmosphere was good," Netanyahu spokesman Nir Chefetz said in a statement several hours after the meeting ended. He said the two leaders' advisers "continued discussions on the ideas raised at the meeting" and would hold further talks on Wednesday. In spite of attempts on both the Israeli and American sides to bring the crisis to an end, there is still lingering tension and lack of trust within the Obama administration toward Netanyahu. An American source close to the administration said that Obama and Secretary of State Hillary Clinton have decided to "test" Netanyahu and see whether he will carry out his promised gestures of good will toward the Palestinians. According to an Israeli source who has discussed the matter with senior U.S. officials, Secretary of State Hillary Clinton and the president are dissatisfied with a letter given to them by Netanyahu, in which he detailed steps he is willing to take to restore American confidence in his government. Meanwhile, Saudi Arabia lashed out Wednesday at Israeli government policy, asking major powers involved in Middle East peace-making for "clarifications about Israel's arrogant policy and its insistence on defying international will." The announcement of new building in East Jerusalem on the day that U.S. Vice President Joe Biden arrived in Israel this month sparked fury in Washington, which vocally expressed its annoyance. The prime minister and his aides said that a meeting with Clinton and Vice President Joe Biden on Monday, which served as a preamble to the meeting with Obama, was conducted in excellent spirits. Israel had angered Biden by announcing plans for 1,600 new Jewish homes in east Jerusalem during his visit to the country two weeks ago. An Israeli source noted that both Biden and Clinton used strong language and made it clear to Netanyahu that he would need to make further concessions to American demands in their meeting if trust is to be restored. The same source said that the Americans are convinced that the answers Netanyahu had given them are insufficient. Washington officials have also been irritated by Netanyahu's attempts to draw equivalency between building inside Israel's internationally recognized borders and in east Jerusalem. "I think at one point the prime minister added that he did not see a distinction necessarily between building in Jerusalem and building in Tel Aviv. We disagree with that," a White House spokesman said ahead of the meeting. In a sign of White House concerns about lingering tensions, press coverage of the Oval Office talks was barred and no public statements were planned. Before seeing Obama, Netanyahu told U.S. lawmakers he feared peace talks may be delayed for another year unless Palestinians drop their demand for a full freeze on Jewish building beyond the Green Line, including in east Jerusalem. "We must not be trapped by an illogical and unreasonable demand," Netanyahu said during his meeting with House of Representatives Speaker Nancy Pelosi and other congressional leaders, according to his spokesman. "It could put the peace negotiations on hold for another year," he said of the talks, suspended since December 2008. (23,02)