The tension between Israel and the United States intensified this week due to disputes regarding the Israeli-Palestinian peace talks and the effort to find a diplomatic compromise with Iran over its nuclear program. Prime Minister Benjamin Netanyahu has attacked what he termed the “bad deal” being formulated with Iran, while other ministers have been critical of U.S. Secretary of State John Kerry’s conduct with regard to the Palestinian talks.

Israeli diplomatic sources say that the atmosphere behind the scenes is even more hostile and tense than it has been portrayed in the media. A senior minister told Haaretz that Kerry can no longer serve as an honest broker between Israel and the Palestinians.

Tensions flared on both tracks almost simultaneously. Last Wednesday, November 6, just before talks with Iran resumed in Geneva, the Americans gave top Israeli officials an update on the planned offer to Iran. Israel understood from the report that the Obama administration planned to offer Tehran significant economic relief by releasing $3 billion to $4 billion worth of Iranian assets that had been frozen in the West. Israel protested what it considered an excessive gesture.

But two days later, on Friday morning, it became clear that the emerging agreement favored Iran even further. It turned out that the six big powers were preparing to offer Tehran additional relief from sanctions in other key areas, such as its petrochemical industry, gold trading, the automotive industry and the import of spare parts for aircraft. Jerusalem estimates the value of these benefits at about $20 billion (while Strategic Affairs Minister Yuval Steinitz cited a figure double that this week, his colleagues believe his estimate was excessive).

Jerusalem has suspected for some time now that Washington and Tehran have been communicating directly, in secret, ever since the Iranian presidential elections in June and perhaps even earlier. The information that reached Israel last week seemed to confirm that suspicion.

“The administration cooked up something here that cannot be described in words," said the senior minister. “The Americans tell us that if we are too tough, we’ll undermine Iranian President Hassan Rohani. But that’s nonsense: the only one who counts in Tehran is Ali Khamenei, the spiritual leader. Rohani is merely the pleasant face of the regime, the one that’s sent to the United Nations and the Geneva talks.”

According to the minister, “Khamenei returned to negotiations on his knees due to the severe impact of the sanctions on the Iranian economy. Instead of exerting more pressure to force him into a corner, the Americans decided to give in.”

Netanyahu and his ministers believe, in stark contrast to the Americans and some of the other negotiating powers, that it’s possible to extract a much better agreement from Khamenei, one that will totally halt uranium enrichment at all levels and shut down the centrifuges. They argue that if forced to choose between acquiring an atomic bomb and the survival of his regime – and the economic crisis puts the ayatollahs’ regime in real danger - Khamenei would choose survival. But so far the West has succeeded in extracting very little from him.

“They are talking about suspending operations at the heavy water reactor at Arak for half a year during the interim agreement, but Arak wasn’t in any case meant to start operating until the end of 2014,” the minister said. “The Iranians already converted uranium enriched to a 20 percent level into fuel rods, at their own initiative, after Netanyahu drew his red line during his address at the United Nations in September of last year.”

The minister explained that as long as the Iranians preserve the ability to enrich uranium to 3.5 percent and the centrifuges keep working, they will maintain their ability to produce enough enriched uranium for a nuclear bomb within a few months. Therefore, the proposed settlement does nothing to roll back Iran’s weapons potential.

If that were not enough, the presumption that sanctions will be eased has already translated into improvements for the Iranian economy, the minister said. “The Chinese plan to resume negotiations on contracts with them; European businessmen are already standing in line to close new deals. In fact, Iran's economy is about to be rescued. It will be very difficult to reverse the situation, especially if the far-reaching concessions that the powers plan to approve later on are actualized.”

According to the Israelis, America is falling into Iran’s trap. Tehran, from the moment even some of the sanctions are lifted, will not hurry to sign a final agreement but will try to drag out the interim arrangement for as long as possible.

Once these details became clear, Netanyahu attacked Obama publicly. At the same time, similar criticism was heard from France, Saudi Arabia and the Gulf emirates. Kerry, who had planned to join the talks in Geneva last Friday to sign on the interim agreement, changed his approach and tried to reopen the terms of the deal. As a result, the Iranians balked, leading to a decision to hold another round of talks next Wednesday, November 20.

But the administration now faces another front, this time at home. With Israel’s quiet encouragement, two new legislative initiatives are making their way through the U.S. Senate. Democratic Sen. Bob Menendez is trying to garner support for imposing a new round of tougher sanctions against Iran, despite Obama’s opposition, and Republican Sen. Lindsey Graham is promoting a bill that would allow the administration to attack Iran (and would also, under one idea being discussed, assure U.S. support if Israel bombs Iran’s nuclear sites). Menendez estimates that his proposal has a majority of 75 out of the 100 senators, while Graham is talking about 95 votes for his bill.

Yet despite all the difficulties the Obama administration seems determined to strike a deal with Iran in the upcoming round of talks. This puts Israel once again in its favorite position – being able to say “We told you so.” It will warn against the damage caused by the agreement and wait for it to collapse in the future. Netanyahu will continue to hint at possible Israeli military action, although it doesn’t seem realistic at the moment.

Parallel to the dispute over Iran, arguments also broke out with Washington over the negotiations with the Palestinians. Israel infuriated the administration by issuing tenders to plan some 24,000 new homes in the West Bank. Jerusalem, meanwhile, was irate over the warnings that Kerry issued in an interview with Channel 2 of a third intifada breaking out if there was no progress in the talks. In this case, Jerusalem points to the secretary of state, and not the president, as the source of the tension.

“This is a direct confrontation with Kerry, not Obama,” said the senior minister. “The diplomatic talks are the secretary of state’s baby. His ideas are simply not connected to reality. He preaches to us and threatens us with a combination of a third intifada, international isolation and legitimizing unilateral Palestinian applications to UN-related organizations. This man is providing legitimacy to Palestinian behavior that deviates from the framework of our agreements. He is not an honest broker.”