Israeli Prime Minister Benjamin Netanyahu clashed with German Chancellor Angela Merkel Thursday over new Jewish settlements but both were at pains to stress their unshakable ties.
On a visit that risks being overshadowed by the diplomatic storm that has strained relations with close allies, Netanyahu joined Merkel for a meeting between most of their cabinet ministers after a private dinner late Wednesday.
Merkel told reporters at a joint news conference that Germany, like other Western partners, hoped Israel would drop plans to build 3000 settler homes on a strategic strip of occupied Palestinian land.
"On the question of settlements, we are agreed that we are not agreed," she said with a faint smile, looking at Netanyahu.
Netanyahu insisted his settlements policy did not mark a radical new departure and merely picked up where other Israeli governments had left off.
"I have not changed the policy. This is an old policy," he said.
"I think the root cause of the problem is not the settlements. I hope that we can engage at least part of the Palestinian people in a discussion about mutual co-existence, about mutual peace."
Netanyahu said Israel remained committed to a two-state solution with the Palestinians.
"Israel remains fully committed to achieving peace with the Palestinians based on the principle of two states for two peoples," he said.
"I haven't given up on it. We don't give up so quickly on anything."
The Israeli leader arrived from Prague where he had singled out the Czech Republic for its "friendship and courage" as the only European state to have opposed a Palestinian status upgrade at the United Nations last week.
It was Netanyahu's first European visit since the UN vote.
Setting a bitter tone for the Merkel meeting, Netanyahu had told Thursday's German daily Die Welt that he was "disappointed" that Berlin had abstained from voting at the UN despite reported pleas by Israel to reject the Palestinian resolution.
But at Thursday's press conference, he repeatedly thanked Germany and Merkel personally for unwavering support of Israel's security.
"I want to make it absolutely clear that I have no doubt whatsoever about your commitment to Jewish security and the well-being of the Jewish state," he said.
France, Britain, Spain, the European Union, Denmark, Sweden, Australia and Egypt have all summoned the Israeli ambassadors to protest the settlement plans, which also drew criticism from Russia and Japan.
Germany, long considered Israel's closest ally in Europe with ties rooted in the country's bid for atonement over the Nazi Holocaust, stopped short of such a move.
But Merkel has sharply condemned the policy as potentially torpedoing hopes for peace and the viability of a Palestinian state.
She avoided such barbed language at the press conference, and renewed her vehement support for its recent military action in Gaza in response to repeated rocket fire.
Merkel also repeated a call for a resumption of peace talks between Israel and the Palestinians.
"We believe that work towards a two-state solution must be continued," she said, adding: "In our view, we need to try and return to negotiations and unilateral measures should be avoided."
Israel's settlements stance has also worried the United States, its staunchest ally, which asked it to reconsider the decision.
But Netanyahu, who is facing stiff opposition at home ahead of a snap election next month, has refused to go back on it.
The Israeli-German joint cabinet meeting, the fourth of its kind, was billed as focusing on "innovation, education and sustainability".
While in Berlin, Netanyahu will visit with German Foreign Minister Guido Westerwelle a Holocaust memorial at a railway station from which the Nazis deported thousands of German Jews to the death camps during World War II.