US denies 'unfounded' report of Israel sanctions

WASHINGTON - The United States Monday strongly denied an "unfounded" report that the administration was mulling whether to impose sanctions on Israel, after it had raised hackles among US lawmakers.

"I can set the record straight and be clear that reports that we might be contemplating sanctions against Israel are completely unfounded and without merit," State Department spokeswoman Jen Psaki told reporters.

She was speaking after the Israeli daily Haaretz last week said the White House was considering taking action against Israel to punish it for its continued settlement building.

The daily, did not use the term "sanctions", but quoted an unnamed senior Israeli official saying White House officials held a classified discussion a few weeks ago on "taking active measures against the settlements." Several steps including refraining from vetoing UN resolutions condemning Israel were discussed, the paper said.

The Obama administration has consistently denounced the building of Jewish settlements in the West Bank and Arab east Jerusalem as a hurdle to any moves to reach a two-state peace deal with the Palestinians.

But despite increasing US frustration that the Israeli leadership has continued building settler homes, it has never put in place any consequences.

Republicans angered by the Haaretz report had written to the White House to demand an explanation.

"Not only is the administration rejecting new sanctions to end Iran's nuclear threat, it's now reportedly developing sanctions against our closest ally, Israel," said Senator Mark Kirk in a statement on Friday.

"This move only worsens perceptions that the administration treats our friends like enemies and our enemies like friends." jkb/rcw US-Israel-diplomacy-sanctionAFP 082155 GMT DEC 14